Responsibilities and Duties of A Trustee: What to Do when Grantor is Incapacitated.

So, you have taken on the responsibility of being a trustee for someone. You may have a million questions running through your head, as well as what to do when the grantor becomes incapacitated. Read ahead to resolve your worries and anxiety over handling a trust.

How Will I Know if the Grantor is Incapacitated?

Usually, the trust document contains instructions for determining the grantor’s incapacity. The trust may require one or more doctors to certify the grantor is not physically or mentally able to handle his or her financial affairs.

What Do I Do if the Grantor is Incapacitated?

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If all assets have been transferred to the trust, you will be able to step in as trustee and manage the grantor’s financial affairs quickly and easily, with no court interference.

First, make sure the grantor is receiving quality care in a supportive environment. Give copies of health care documents, medical power of attorney, living will etc., to the physician. If someone has been appointed to make health care decisions, make sure he or she has been notified. Offer to help notify the grantor’s employer, friends and relatives.

Next, find and review the trust document. Notify any co-trustees as soon as possible. Also, notify the attorney who prepared there trust document; he or she can be very helpful if you have questions. You may want to meet with the attorney to review the trust and your responsibilities. The attorney can also prepare a certificate of trust, a shortened version of the trust that also proves you have legal authority to act.

You will want to become familiar with the grantor’s insurance, medical and long term care, and understand the benefits and limitations. Assuming the insurance will cover a certain procedure or facility could be a costly mistake.

Have the doctor(s) document the incapacity as required in the trust document. Banks and others may ask to see this and a certificate of trust before they let you transact business.

If there are minors or other dependents, you will need to look after their care. The trust may have specific instructions. If the grantor’s incapacity is expected to be lengthy, a guardian (of the person, not the assets) may need to be appointed by the court. An attorney can help you with this.

Become Familiar with the Finances

You need to know what the assets are, where they are located and their current values. You also need to know where the income comes from, how much it is and when it is paid, as well as regular ongoing expenses. You may need to put together a budget.

If you cannot readily find this information, family members, bankers, employer, or their accountant may be able to help you. Last year’s tax return may be helpful as well. Also, if you discover any assets that were left out of the trust, the attorney can help you determine if they need to be put into the trust and assist you.

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Get Prepared

Apply for disability benefits through the grantor’s employer, social security, private insurance and veteran services. Notify the bank and other professionals that you are now the trustee for this person. Put together a team of professionals ( attorney, accountant, banker, insurance and financial advisors) to help you. Be sure to consult with them before you sell any assets.

Now, you can start to transact any necessary business. You can recieve and deposit fund, pay bills and, in general, use the person’s assets to take care of him or her and any other dependents until recovery or death.

You’ll need to keep careful records of medical expenses and file claims properly promptly. Keep a ledger of income received and the bills paid. An accountant can show you how to set up these records properly. The trust may require you to send accountings to the beneficiaries. Also, don’t forget income taxes and property taxes.

If you have any questions or would like to set up an appointment, please call us at (559) 299-4341.

COVID-19 UPDATE

These are challenging times.

The rapid spread of COVID-19 has caused major disruptions to virtually all aspects of our lives. Churches are closed. Schools are closed. Small, “non-essential” businesses are closed. The healthcare system is at a breaking point.

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We ask, or should be asking ourselves, questions about Estate Plan arrangements, especially if it’s not in place yet. For example, if I contract Coronavirus and require hospitalization and/or become physically incapacitated, who will be my advocate to respectfully handle my medical and financial decisions? If I should not survive, who is the person to properly handle my estate and pay my financial debts? Whom should I trust to securely distribute my property to those persons who I wish to receive my property? These are the questions you should be asking, and that we can answer.

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A typical Estate Plan will consist of the following documents:

Advanced Healthcare Directive 

Directs the specific types of treatments you do and do not want when you are unable to make decisions. You authorize another person to act on your behalf, commonly known as your “agent” to see that your wishes are carried out.

Durable Power of Attorney

Authorizes your agent on your behalf for any number of purposes spelled out, including but not limited to: financial matters, insurance, tax reporting, contracts and the like.

Revocable Trust

Authorizes a trustee, someone who is usually the creator of the trust, to hold title and manage your assets during life. They also thereafter distribute-assets on your death to those beneficiaries you select. The trust may also be revised during life. Any assets titled under your own individual name and without a beneficiary designation, or are not in a Revocable Trust, are typically subject to probate procedure. This is a Revocable Trust that is essential in the planning process as it provides the following: avoids legal fees, court costs and hassles of a court probate administration, preserves privacy and greatly simplifies the transfer of your estate. The trust must be properly funded with assets during life to accomplish its goals.

Pour Over Will

Serves as a safety device to capture or direct to your Revocable Trust any assets on your death that were inadvertently left out of the Revocable Trust. The Pour Over Will insures that these excluded assets are distributed to those beneficiaries of your Trust.

Certain assets may not be owned by Revocable Trusts such as IRA’S, defined contribution plan interests, defined benefits and the like. With these assets, it is common to designate beneficiaries on the financial institution’s forms.

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We Are Here For You

With over 38 years of law practice, Jeffrey Pape is highly recognized by his peers, having received some of the highest ratings attainable in the profession. The Law Firm of Jeffrey B. Pape will continue its mission to provide personal, quality, timely and cost effective representation in spite of the Coronavirus.