One of the benefits of your Living Trust is that it provides a means for you to ensure that the person you trust the most will be able to step in as Successor Trustee and thereby manage your property, in the event that you become incapacitated.
This requires that the trust document set forth the definition of “incapacitated” and the means for determining whether or not your condition meets that definition, which in our documents is stated as follows:
“I shall be considered incapacitated during any time that, because of age, illness, mental disorders, dependence on prescription medications or other substances, or any other cause, I am unable to effectively manage my property or financial affairs.”
Unless otherwise specified in the trust document, under Maryland law a person is only considered “incapacitated” if they have been adjudicated as such by a Court after a guardianship proceeding. To avoid that heavy and costly burden, trust documents prepared by virtually all attorneys specify that a person is incapacitated upon a determination by written “disability statements” signed by two licensed physicians.
Through our many years of experience, we have encountered many situations where the family member named as Successor Trustee in a client’s Living Trust has been unable to obtain such physician statements. The first roadblock is the physician-patient privilege, and the difficulty of even getting the doctor to speak to the family member (even though we will have provided the client with a HIPAA Authorization form). Even if you can get past the privacy issues, it is often a logistical challenge to get two doctors to sign the certifications. In situations where time is of the essence, navigating these challenges can create significant problems.
In order to avoid the need for having to deal with either courts or doctors, we can provide our clients the option of including a special provision in their Living Trust that says that you are “incapacitated” when your Disability Panel says so. The Disability Panel consists of two or more people you designate (typically your trusted family members). With this provision in your trust, all it takes for your Successor Trustee to have authority to act on behalf of the trust is a statement signed by the persons on the Disability Panel. There is no need for the involvement of any court or any doctors.
Clearly, giving other people the power and authority to declare you incapacitated is something that should only be done in the right situation and after proper consideration. But for some clients it can add even more value to their Living Trust by making it easier to provide for the management of their assets and affairs in the event of their incapacity
Our Initial Estate Planning Consultation is designed to give you the opportunity to find out about our firm, our approach to estate planning, and to help you decide if our services fit your needs and objectives. It is also designed to give you all of the information you need in order to determine what planning is right for you and your family.