As our parents age, we often find ourselves facing challenges we never anticipated. Among these, witnessing a parent lose their capacity to manage their affairs due to dementia or other illnesses can be particularly heart-wrenching. This difficult situation necessitates a clear understanding of legal mechanisms like trusts, and the roles of a successor trustee and power of attorney agent (POA). Here's a guide to help you navigate these complexities to ensure your aging parent's wishes are honored and their wellbeing is safeguarded.
Understanding Trusts and the Successor Trustee Role
A trust is a legal arrangement where assets are held by one party for the benefit of another. Your parent may have set up a revocable trust to manage their assets, providing instructions for how these assets should be handled and distributed after they pass. The person managing the trust is known as the Trustee. Typically, the Trustee is the person who established the trust.
When a Trustee is no longer capable of managing the trust due to health issues, a Successor Trustee, whom your parent would have named in the trust document, steps in. This individual is responsible for managing the trust’s assets according to the terms set out by your parent or parents.
Duties of a Successor Trustee
Upon realization that a parent is losing capacity, the successor Trustee should:
- Review the Trust Document: Understand the specific instructions laid out by the parent, the assets included in the trust, and review who are the beneficiaries.
- Locate and Manage Trust Assets: Locate all assets of the trust and take over their management. This might include paying bills, managing investments, and ensuring the trust’s property is properly maintained.
- Communicate with Beneficiaries: Keep all beneficiaries informed about the trust’s administration and any actions taken.
- Contact a Trusts and Estates Attorney: You should contact a qualified estate planning attorney for help with the legal work to get the Successor Trustee legally appointed as the current Trustee.
- Fulfill the Trust’s Terms: At the conclusion of the legal process of Trust Administration, distribute assets to beneficiaries as outlined in the trust document when the time comes.
The Role of the Power of Attorney
A Power of Attorney (POA) is a legal document that grants someone the authority to make decisions on behalf of another person, known as the principal. There are different types of POAs, but in the context of an aging parent losing capacity, a durable power of attorney for finances and healthcare (in California, called an Advance Health Care Directive) becomes crucial.
Responsibilities of a Power of Attorney
The appointed agent under a Power of Attorney may need to make financial decisions including managing bank accounts, paying bills and handling investments for any assets not owned by the Grantor’s revocable trust. If you are also the appointed health care agent for your parent you might also make healthcare decisions, choosing medical treatment or facilities according to your parents’ wishes.
Steps to Take
If you are the Successor Trustee or have been granted Power of Attorney, taking swift and thoughtful actions is essential.
- Obtain a Professional Evaluation: Document your parent’s incapacity through a professional evaluation by a healthcare provider. This is often required to activate your role under a Power of Attorney or trust (check the incapacity standards outlined in the document first).
- Organize Your Documents: Ensure you have all of the necessary legal documents in order, including the trust and Power of Attorney document.
- Consult with Professionals: Engage with a qualified estate planning attorney to navigate the complexities of managing your parent’s affairs and ensuring you have the legal documentation to show you have legal authority to act as the Successor Trustee and/or Power of Attorney agent.
- Communicate Openly and Often: Maintain transparent communication with all family members and beneficiaries to avoid conflicts and ensure everyone understands the steps being taken.
Watching a parent struggle with dementia or any illness that diminishes their capacity is challenging. However, through careful planning and compassionate action, you can help manage their affairs and honor their wishes. If you are a Successor Trustee or hold a Power of Attorney, it's crucial to understand your responsibilities and act accordingly. Remember, you're not alone on this journey. Professionals, from qualified estate planning attorneys to financial advisors and CPA’s, can offer guidance and support every step of the way.
In these trying times, the most important thing is to ensure your parents’ dignity is respected and their well-being is prioritized. With the right preparation and support, you can navigate these responsibilities with grace and compassion.
If you, a friend, or family member need help navigating the care for a parent or with establishing or restating an estate plan, please reach out to our Intake Department at 760-448-2220 or at https://www.geigerlawoffice.com/contact.cfm. We have offices in San Diego (Carlsbad) and Orange Counties (Laguna Niguel), but we can assist families throughout California as well.
