Posts tagged trustee
Who makes decisions when there are multiple Trustees?

As a general rule, a trust should be explicit as to how decisions should be made among Co-Trustees of a Trust. Fortunately, when a trust document is silent, the California Probate Code provides a number of default provisions to clarify how a trust should operate. 

One such rule is California Probate Code Section 15620, which provides:

Unless otherwise provided in the trust instrument, a power vested in two or more trustees may only be exercised by their unanimous action.

Where there are only 2 co-trustees, this rule makes a great deal of sense, as one would not want only 1 of the 2 co-trustee making a given decision. On the other hand, if a trust has 3 or more co-trustees, it may be preferable to have decisions be made by a majority, on the theory that over 50% of the trustees agree upon a course of action.

The default rules exist to help us avoid questions regarding interpretation of trust documents, but sometimes opting out of certain rules or defining how such decisions should be made can result in a trust being operated in a more efficient manner.


Who should act as Trustee of my revocable living trust while I am alive?

Typically, you will act as the Trustee of your own revocable living trust. This is primarily the case where the purpose of your trust is to plan for possible future incapacity or to avoid probate at the time of your death. For most purposes, you will want to remain in control for as long as possible, and serving as Trustee of your own trust is one way to accomplish this.

In fact, aside from re-titling your assets in the name of your trust, generally once your revocable living trust is established, you should see no practical change in the way you live your life. Yes, you are the Trustee, but on a day-to-day basis, you will continue going about your life without any substantive change to how you handle the management of your assets.

If a client is suffering from a condition that necessitates the help of another person to manage their assets, it may be worth considering bringing on a Co-Trustee or being replaced as the Trustee for the purpose of assisting the client with his financial affairs. In this particular case, the Trustor generally retains ultimate control and has the power to remove the Trustee, if necessary.

What is a Durable Power of Attorney? (A Brief Overview)

A shorty, but a goody today. The Durable Power of Attorney is a legal document that allows you to name someone (also known as an "attorney-in-fact" or "agent") to make financial decisions for you. The Durable Power of Attorney can even be drafted broad enough to allow the agents to make gifts on your behalf or to transfer assets to your revocable living trust if you have created one. This document is only effective while you're alive. 

Why Do You Need One?

Most people only plan for death, but with advancements in medicine, it's possible to be alive for quite a while but be incapacitated to the point where you're unable to make decisions regarding your assets. Having a Durable Power of Attorney can help you avoid a court-supervised conservatorship and may allow your loved ones to act more quickly in the event that something happens to you and important decisions need to be made regarding your financial affairs.

Overlap With Trustees?

You may be thinking that the agent under a durable power of attorney would seem to have a conflict of interest with the Trustee of your Trust, but that is generally not the case. First, the agent under your Durable Power of Attorney is often the same individual that you've chosen to be your successor Trustee. Second, your Trustee deals with assets contained within your revocable living trust, whereas the agent under your Durable Power of Attorney principally deals with assets that are outside of your trust.

The Durable Power of Attorney is frequently a standard document that is incorporated into an estate plan, so don't be surprised if your estate planning lawyer includes one for you as well. Even if the cost of estate planning is outside of your budget, I encourage everyone to have a Durable Power of Attorney, as it is inexpensive to prepare and can even be found in the California Probate Code (Section 4401).

What is it like to work with an estate planning lawyer? (Step 2)

So you've had an initial conversation with an estate planning lawyer and you've exchanged communications. The time has now arrived for you to have a more extended meeting to discuss the finer points of your estate plan. Don't worry! If you and your lawyer have done the necessary homework, this last step won't be difficult.

Presence of Family

For this extended meeting, it may be a good idea to bring along key family members who may be involved in your estate plan. For example, if you've named a family member to serve as your successor Trustee or your Executor. It is by no means necessary, and some people elect not to do that so that they can maintain privacy.

The only instance where you should bring a family member (if at all possible), is if you're married or in a registered domestic partnership. Your spouse and/or partner is more than likely going to be an integral part of your estate plan--indeed, you and your spouse/partner will likely have a joint living trust, so they would be a client too!

If your family comes along or if a family member introduced you to the estate planning lawyer, the lawyer will be diligent about making sure that you are not being coerced into making an estate plan that benefits the other family members. The estate planning lawyer will also check to make sure that you understand the nature of your requests and that you have the mental capacity to instruct the lawyer on creating an estate plan. The lawyer's ultimate obligation is to the client, which means that he or she will act in your best interest.

Details of the Discussion

At the meeting, the lawyer will try to get a sense for some or all of the following:

  1. The nature of your relationship with the people you want to include in your estate plan.
  2. What your particular needs or concerns are.
  3. Any specific health care or medical needs you or a family member may have.
  4. If you own a business, whether you've established a plan for succession or whether there's any "going concern" value (aka, is the business worth something if you aren't working in it?).
  5. Whether you want to donate to charities.
  6. How you want to structure gifts to beneficiaries who are minor or suffering from incapacity or other conditions, which makes an outright gift infeasible.

Remember that your estate planning lawyer is ultimately translating your wishes into legal format, so you should feel open and tell the lawyer what you are thinking. Keep in mind that an estate planning lawyer has likely worked with many clients who are facing similar decisions to you, and can often help you see the potential obstacles in how you want to structure your estate plan. In fact, this is one of the best values of having a live lawyer help.