Consequences of Failing to Act When a Trustee Is Mentally Incompetent
As the loved one of a person who has created a trust, you are wise to be concerned as to what can happen if this individual becomes mentally incompetent. In most cases, your loved one is named as the trustee of his trust while he is alive. If he becomes mentally incompetent, however, a successor trustee would step in to take control of the assets. In order for this to work effectively, you must be diligent and act quickly when you suspect there is a problem.
Four Potential Hazards When a Trustee Becomes Mentally Incompetent:
Failing to act quickly when you suspect that your loved one is no longer mentally competent can have disastrous consequences for his or her trust and its beneficiaries. The following are just four of the many possibilities:
- Your loved one may take actions outside of the trust that is contrary to his goals and intentions when he created his estate plan. For example, he may start giving his assets away to people that he does not have a close relationship with, rather than leaving them in his trust to be distributed to his children after he passes.
- Your loved one may fail to take the actions necessary to properly manage the trust assets. For example, your loved one may stop paying the insurance on the trust’s San Diego real estate. As a result, if there is a fire or some other incident, the damage may not be covered by insurance.
- Your loved one may fail to carry out the actions necessary to ensure the trust is funded properly. For example, if your loved one receives new assets, he may not move those assets into the trust. This means that a probate administration may have to be carried out after he passes. Probate can be avoided when assets are placed in trust.
- Your loved one may attempt to make changes to his trust that are inconsistent with his estate planning goals. For example, your loved one may change his successor trustees, appointing someone who is inappropriate for the job.
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