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Copyright 1996, Marc S. Weissman Certified Specialist: Estate Planning, Trust and Probate Law Certified by the California Board of Legal Specialization of The State Bar of California Weiss & Weissman, San Francisco, California (650) 574-0362 To Contact us: email Phone/Fax/Mail Homepage |
This Article is designed to be of general interest. The specific techniques and information discussed may not apply to you. Before acting on any matter contained herein, you should consult with your personal legal adviser.
If a person is incapacitated, a Probate Conservatorship is usually necessary to appoint a person to manage finances and make personal and health care decisions for a person unable to make such judgements for himself.
Probate is imposed on three categories of people who are under "legal disabilities" and cannot legally manage their own finances:
The rules for each are different, but the common elements are that the proceedings are public, messy, expensive, and full of delays.
The best method of avoiding Probate in all 3 of these categories is a Living Trust.
A person who forms a Living Trust may state that if he should become physically or mentally incapacitated, another person (e.g. his most trusted friend or family member) automatically is appointed to manage finances for him, thereby avoiding a Probate conservatorship.
In addition, the client actually can set the standard for determining his incapacity.
For example, Mr. X's Trust states that if he is incapacitated, his sister S is the new manager, to manage X's finances for X's benefit.
Mr. X then defines incapacity as being a statement by his personal physician, Dr. John Smith, that X cannot manage his own finances due to physical or mental incapacity.
It is not necessary that the person to determine incapacity has any medical background. Mr. X may select his best friend or even may appoint a committee ("all 3 of my children by unanimous agreement"). Until the defined event occurs, X is not incapacitated and he remains in control of his own finances.
When a client appoints a manager to take over on incapacity, and also puts safeguards on defining incapacity, the client retains maximum control over his finances.
This is a very sensitive area, as anyone who has tried to tell a parent to stop driving due to failing eyesight and reflexes knows. Care is needed to protect the client's wishes yet provide for a smooth transition should incapacity occur.
Last month, Mr. C called, asking to start a conservatorship for his Dad who was "in the early stages of Alzheimers." Instead, we suggested a Living Trust, to allow management by the son C without a Probate proceeding.
Can elderly people execute Wills or Trusts? YES, if they are competent at the time they execute the documents.
Mr. C's father was coherent (after having his medication) every day in the late morning. So we met at 10 AM to sign a Living Trust which avoided the need for a Conservatorship.
Another new client, Mr. Ross, was nervous about his pending heart operation. He came in on Friday morning; we talked for 2 hours. He came back at 6 PM and signed the Trust. [His operation on Monday was successful. After he recovered we reviewed once again what he wanted and did not have to make any changes.]
A recent Saturday morning I received a call at home that Mrs. T was having a liver transplant and wanted a Trust. We met for 2 hours at the hospital and discussed her desires. I drafted a Trust and returned 4 hours later. She signed the Trust and related documents. When she dies, Probate will be avoided.
A Trust can be done that quickly.
Mr. Rose is now faced with the aggravations and costs ofProbate. Mr. Ross and Mrs. T each will be able to avoid Probate.
Obviously it is better to form a Trust before the last minute, but even then it is not too late.
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