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Understanding how trusts can help when incapacitated

Drafting estate planning documents is an important part of having the proper plans in place for the future, especially in the event of becoming incapacitated. Many people harbor a fear of what will happen to them and their assets without the protection of certain types of trusts. A living trust is useful in such a circumstance. Knowing its intricacies is integral to deciding if it is the right alternative. A person who is his or her own trustee should have a successor trustee in the event of incapacitation. If there is no living trust, another person would have to manage the assets.

How the assets are allocated would determine who manages the assets. If the assets were separate or community property and if there was a durable power of attorney will be essential to this process. A person who is married will have the assets that were acquired during the marriage viewed as community property. However, property that was owned before the marriage or items that were a gift or inheritance will be separate property. Community property can be managed by the spouse if he or she is deemed competent. A person who is not married or has separate property would be managed by an attorney-in-fact with a durable power of attorney. Failure to plan for this potential eventuality will leave the assets in the hands of the probate court, otherwise known as a conservatorship.

With conservatorship, the judge might decide that the person is no longer able to handle his or her affairs. Someone would be appointed to manage them in the person's stead. The conservator would periodically report to the court. The conservator could have been nominated by the person in the past. If no one was nominated, it could be a spouse or a different family member. With no one available, it might be a public guardian.

Conservatorships are protective devices, but they are basically at the whim of the court. Since that is not optimal for many people, having a designated person to serve as the trustee in the event of incapacitation as well as other issues is a wise decision. Discussing the matter with an attorney experienced in estate planning and probate can provide advice and guidance as to the value of living trusts.

Source: calbar.ca.gov, "4. How could a living trust be helpful if I become incapacitated?," accessed on May 16, 2017

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