If you went to the trouble to create a California estate plan that includes a revocable Trust, durable power of attorney for financial assets, and a healthcare directive, you probably have a capacity provision in each of these documents. The capacity provision says that your successor Trustee or successor agent (under the durable power of attorney) will take over when you have lost your capacity. When is that exactly?
Do you have capacity now or later?
The problem with people who have lost their capacity to make decisions is that they don’t always (or ever) know it has occurred. And they may not like people telling them they lost their capacity to make decisions. So how do you determine if a parent or family member has wandered into incapacity—the type of incapacity that triggers a successor Trustee or agent to act?
Is there a Doctor in the house?
Most Trusts and durable powers of attorney have a clause that states how capacity is to be determined. And most capacity clauses require a letter from a treating physician stating that the person in question has become incapacitated, or unable to make financial decisions.
The problem, however, is that obtaining a doctor’s letter is not always feasible. For one thing, you may have to ask for the letter in the presence of your parent or family member with the capacity problem, which might be uncomfortable if he or she insists on having capacity. Or maybe you do not have access to a person’s physician. Or maybe the physician states that he or she is not qualified to make a diagnosis on capacity—requiring a trip to a specialist in neuroscience or psychology.
If you can’t beat ‘em, joint ‘em.
You have two options:
(1) have a conversation with your parent/family member to explain why a doctor’s letter is needed and how it will help them to properly manage their financial affairs, or
(2) avoid the capacity issue altogether and instead have the person resign as Trustee or add you on as a co-Trustee to help manage the Trust assets.
Sometimes asking to be appointed a current co-Trustee is easier to discuss with a parent than telling him or her that they have lost their capacity (the difference between “Mom you’ve lost it” versus “Mom can I help you with paying your bills?”).
There is no easy way to make this transition, but the more open you can be about the various options you have, the better for everyone involved.