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Wednesday, October 24, 2018

Replacing the Trustee of a Living Trust

What happens if a trustee becomes mentally incapacitated?

While the goal of skilled estate planning attorneys is to eliminate or reduce surprises, sometimes real-life situations play out like a bad reality TV show.

Such was the case involving a 92-year-old Hawaiian princess, her longtime attorney, her longtime girlfriend, and her living trust fund.

Reportedly, the woman – – believed to be the last descendent of sugar plantation royalty that ruled the island prior to 1893 – – was the trustee of a living trust for her benefit. But after suffering a stroke, her longtime attorney questioned her mental capacity and ability to continue to manage the trust fund and sought to take on trustee responsibilities himself.

The princess refused his suggestion and not only fired him, but hired a new attorney. She also married her much younger partner whom she sought to name as the successor trustee. The longtime lawyer considered all of these actions to be “uncharacteristic” of his client and sought court intervention. In addition, he and several of her domestic staff members were allegedly concerned over possible physical and financial elder abuse of the woman by her partner.

The court agreed the woman had sufficient mental capacity to want to change the trustee, but not the mental capacity to choose who that replacement trustee would be-- and so it appointed a local bank as successor trustee instead of the former lawyer or the new wife.

A Living trust is a popular estate planning tool which allows you to place title to your property in the trust while still allowing you to manage the trust as long as you are alive and competent to do so. The trust is revocable (cancellable) during your lifetime and, upon your death it allows for your successor to implement your wishes without the need of going through the time and expense of the probate process. Should you become incapacitated before dying, (as was apparently the case here) your successor trustee could step in and manage affairs without needing to be appointed through a guardianship or conservatorship process.

If you live in New York or New Jersey and need assistance with an initial estate plan or would like to modify an existing one, the attorneys at Merlino & Gonzalez can help you. Contact us today to schedule a consultation.

From our offices in Staten Island, New York and East Brunswick, New Jersey, we represent clients in both states in all aspects of estate planning, estate administration, and real estate.

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