A son has contacted an elder law attorney now that mom is in a nursing home and he’s unsure about many of the planning issues, as reported by the Daily Republic. The article, “Amending trust easier if parents can make informed decision,” describes the family’s situation.
There is one point to consider from the start. If the son been involved in the planning from the start by meeting with the attorney and discussions, he might have less uncertainty about the plan and the details.
As for the details: mom is in her 90s with some savings, a few annuities, a CD and a checking account. She was left with five acres of land which is her home and a duplex on it and 12 additional acres with a rental property on it. Everything she owns has been placed in a trust. The son wants to be able to pay her bills and was told that he needs to have a Durable Power of Attorney with the correct powers and to be named trustee in her trust.
He reports that his mom is good with this idea but he has a number of concerns. If mom is sued, will he be personally liable? Would the Durable Power of Attorney give him the ability to handle her finances and the real estate in the trust?
If his mom has a revocable or living trust, there are provisions that allow one or more persons to become the successor trustee in the event that the parent becomes incapacitated or dies. If she has appointed him as trustee in the trust he would become the trustee (or alternate trustee if her spouse, had passed).
Usually the Durable Power of Attorney is created when the trust is created so that someone has the ability to take control of finances for the person.
The trust should also show whether the successor trustee would be empowered to sell the real estate. Trusts can be drafted in a way that the client wants it written and the successor trustee receives only the trustee powers that are given in the document. As for the liability, the trustee is not liable to a buyer during the sale of a property. There are exceptions, so he would need to speak with an experienced estate planning attorney to help with the sale.
More specifically, assuming the trust does not name the son as a successor trustee and also does not give the son a power of attorney, the bigger question is are the parents mentally competent to make important decisions about these documents?
Given the age of these parents, an experienced estate planning attorney will be concerned and rightfully so, about their competency and if they can freely make an informed decision, or if the son might be exercising improper influence on them to turn over their assets to him.
There are a few different steps that can be taken. One is for the son, if he believes that his parents are mentally competent, to make an appointment for them with an estate planning attorney, without the son being present in the meeting, in order to determine their capacity and wishes. If the attorney is not sure about the influence of the son, he or she may want to refer the parents for a second opinion with another attorney. If the parents are found not competent, then the son may need to become their conservator, which requires a court proceeding.
Planning in advance and discussing these issues are best done with an experienced estate planning attorney, long before the issues become more complicated and expensive to deal with.
Reference: Daily Republic (Aug. 10, 2019) “Amending trust easier if parents can make informed decision”