Question: My parents created an estate plan with an attorney about 12 years ago. As part of their estate plan, they created a living trust and other documents. They talked to me about becoming successor trustee when they both pass away, and I told them that I would do it. I have only seen the trust once, so I am not really sure what’s in it.
My dad tells me that their powers of attorney only name each other as agents. About five years ago, my mom started experiencing cognitive difficulties, which have progressed, and she is now unable to handle anything. My dad has been taking care of everything since then. My dad has been having his own health challenges recently. We are discussing how I might start to control their accounts.
My dad and I contacted the financial institution holding all of their assets. They said that I will be able to make decisions on certain trust assets once my dad resigns as trustee, but any access to their retirement assets will not be permitted because the powers of attorney are out of date. Apparently, they only accept powers of attorney signed within the last 10 years? What can I do to deal with this situation?
Answer: If you haven’t already, your next step should involve finding out what is actually in their estate planning documents. I don’t mean peeking at the documents to see whether you are a beneficiary. But rather, you should carefully review all the documents to ensure you have or have not been named as a successor agent.
Your parents’ estate plan likely includes a declaration of trust, a last will and testament for each of them, a durable power of attorney for financial management for each, and an advanced health care directive for each. In each document, your mother or father designated someone to make decisions should they become unable to do so. Each document speaks to a different type of asset. For example, the trust instrument covers any asset that is titled in the name of the trust. The power of attorney, however, will deal with any asset that is held by the person as an individual.
You mention that the financial institution will allow you to assume control of trust assets once your father resigns. To that end, your father needs to tender a resignation, and he will probably need to include in his resignation that your mother ceased to act when she became unable to do so. The trust instrument should spell out exactly how these resignations are made.
With both of them stepping down from their positions as trustees and assuming that you in fact are the successor trustee, you will take over this role. As successor trustee, read the trust instrument closely as you are assuming a fiduciary position of enormous responsibility that demands the highest level of care. Manage the assets wisely and prudently.
The powers of attorney may present a problem. Under federal law, only an individual can hold title to retirement accounts, such as IRAs, 401(k)s and the like. With an individual as accountholder, the power of attorney is the main document that determines who can act on the individual’s behalf. Here, you mention that the financial institution is not accepting the power of attorney document because it is “out of date.” Generally speaking, unless there is an expiration date mentioned in the document itself, a durable power of attorney will only expire upon the person’s death. Some companies, however, may have their own rules regarding acceptance of a power of attorney. A third party, such as the financial institution, is not obligated under law to accept a power of attorney.
At this point, your father has the option to simply execute a new power of attorney naming you as agent since he has the capacity to do so. And he absolutely should, as his existing power of attorney may only name your mother as an agent. Your mother, however, does not have the same option. Her lack of capacity precludes her from making a new power of attorney.
Assuming that your dad was right in that only he was named as an agent in her power of attorney, the only way for you at this point to assume control of accounts in her individual name would be to seek a conservatorship through the superior court. That process can be expensive — certainly more expensive than the creation of a power of attorney — but it may be your only choice.
You may want to see if there is some flexibility within the financial institution’s self-imposed rules. Given that the rule is one from within the organization and not a law of our state, it may be that their legal department bends the rule a little in order to accommodate your particular situation. It’s at least worth a try before having to seek a conservatorship in court.
Preston Morgan is a partner at Kopper, Morgan & Dietrich, a Davis law firm providing family law, estate planning and trust litigation representation. His column is published every other week in the Davis Enterprise. To pose a question to Preston Morgan, contact him at https://kopperlaw.com.
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