Hi, this is Keith Davidson at Albertson & Davidson.  In this video, I want to discuss whether the successor trustee of a trust has an obligation to declare the trust settlor incompetent.

Let me explain some of those terms before we get started. The settlor is the person who creates the trust. Typically, when people create these revocable living trusts, they’re the settlor, the creator, and the are also the trustee during their lifetime, so they manage those trust assets.  Somebody is usually named the successor trustee for when the original trustee either loses capacity or dies.

The question is: if you are named as a successor trustee, and you’re seeing the trust settlor is fading and losing capacity, is there an obligation to step in and take action?  This usually happens within families. For example: your father creates a trust, he’s the trustee, and you’re one of three children and named as the successor trustee. You can see that Dad is fading, and starting to lose capacity, and that he is having a hard time managing the finances.  Do you, as a successor trustee, have an obligation to step in and take action?

The interesting thing is that from a legal perspective, you don’t have any legal obligation to step in. A successor trustee doesn’t have any duties, responsibilities, or obligations until they agree to act as trustee.

But, then there’s the moral obligation.  You know that if the trustee can’t manage finances, he going to cause harm to himself because his finances won’t be properly managed, and he’s also going to cause harm to the other trust beneficiaries receiving these assets after he passes away.  And from that perspective, maybe you do have a moral obligation to step in.

The good news: that most trusts usually have a section that tells you what you need to do to have the settlor deemed incompetent. Once you do those things, the settlor is no longer trustee and the successor can step in and start acting.

Many trust documents say you need a letter or declaration from at least one or two treating physicians.  And that’s all you need.  Once you have that letter from the doctor deeming the settlor incompetent, the successor trustee can step into place.  It’s just that simple.  You don’t have to go to court to get an incapacity declaration or a conservatorship. Just follow the steps in the trust.

If your trust doesn’t have instructions on how to have the trustee declared incapacitated, then you do have to go to court.  This is harder and can be a problem.  However, I estimate 90% of trusts have instructions on how to handle the settlor’s incapacity.

So, take a look at your trust. See what it says, and follow those steps. Then, the successor trustee can step in, control and properly manage the assets, and make sure that the trust is stable moving forward.


Hi, this is Keith Davidson with Albertson & Davidson. In this video, I want to talk about some of the warning signs that you should be aware of to clue you in that undue influence might be taking place with one of your parents.

As lawyers, when we get undue influence cases we typically get them after everything’s been done and we’re looking at the facts in hindsight. But, as a child, there’s times when things happen, and you might be suspicious of what’s happening, but you’re not sure if it’s something bad or not. That’s what I want to talk about. These are the warning signs that really should be on your radar and start raising red flags when you see them.

For example, let’s say you have a parent, and you can tell that they’re kind of slowing down, and you notice that somebody (like a neighbor, a caregiver, or a stranger who you don’t even know), starts spending a lot of time with that parent at their house, and then they start helping the parent write checks or go to medical appointments. That could be a real red flag of somebody who’s trying to cozy into the parent and slowly take control.

Typically, the way undue influence works is: somebody starts off by being just a friend, and then a helper, and then they start taking over everything; check-writing, finances, medications, doctor visits, even communications. That’s another warning sign.

Let’s say that you are finding it difficult to talk to your parent. You try calling them and somebody else answers the phone and won’t let you speak. Or, when you talk to your parent, there’s somebody else who’s always on the other line, listening in. That’s a huge red flag that somebody is probably trying to control the flow of information to the parent. That could be a real problem. So that’s another big warning sign.

One of the elements of undue influence is that somebody controls the necessities of life; food, medication, all those sorts of things. So if you see somebody who you aren’t that familiar with, and they’re doing all the grocery shopping for your parent they’re making meals for the parent they might be doing something that’s really nice and maybe there’s nothing wrong with that, or they might be doing something where they’re controlling the flow of food to the parent which is one way to manipulate somebody who is old and not able to resist undue influence. But, that doesn’t mean that every time you see one of these things that it’s bad, but it definitely should raise your attention and you should look into it.

So those are some of the warning signs that you should be on the lookout for in possible undue influence against one of your loved ones.


Let’s pretend you have a crazy uncle that only wears pajamas even when going to places outside his home.  He often goes to his neighbors’ houses and offers to buy all of their furniture even though the furniture is not for sale.  And he sends strange gifts to family members through the mail, which usually consist of raw fish and raw meat.  Does your uncle lack capacity to create a Trust or Will?

Maybe, maybe not, we don’t really know the answer to that questions based on the facts described in the paragraph above because under California Probate Code section 811 you can only prove lack of capacity by first establishing a mental defect.  While all the actions described certainly sound crazy, they do not establish the existence of a mental defect.  Your uncle may just be eccentric or “crazy” in the common sense of the word, but not in the medical sense.

A mental defect is typically a cognitive impairment created by conditions such as dementia or Alzheimer’s disease.  A person with dementia may not do any of the things that crazy uncle above does, and yet a dementia patient could potentially lack capacity to create a Trust or Will.

Crazy uncle on the other hand may or may not have legal capacity, it all depends on whether he has a mental defect.  He certainly has a gifting defect (sending raw fish in the mail), but until a mental defect is established, he is free to create or change his Trust or Will all he wants.

And that’s the difference between lack of capacity and just being eccentric.

One of the biggest benefits of creating a revocable, living Trust is that it allows your successor Trustee to manage your affairs if you lose capacity.  Sounds good, but who decides when your capacity is kaput?

That will be the question for the Court to decide on Monday, July 7th when a Los Angeles County Superior Court judge will decide if Shelly Sterling has the right to act as sole Trustee.

Mr. Sterling’s problem comes from the family Trust he and his wife created to hold their interests in the Los Angeles Clippers Basketball franchise.  The Trust apparently has a provision common to nearly every revocable, living Trust that allows Mrs. Sterling to act as sole Trustee (meaning the sole Trust manager) if Donald Sterling is “incapacitated.”  Most Trusts provisions state that incapacity can be determined by the diagnosis of a single physician.  In Mr. Sterling’s case, he was evaluated by a neurologist who determined that he was suffering from mild cognitive impairment due to mild dementia (as reported in the media).  That was enough for the physician to declare Mr. Sterling incompetent to act as Co-Trustee.

If the physician’s diagnosis controls, then Mrs. Sterling, as sole Trustee, can sell the Clippers to whomever she likes.  If the physician’s diagnosis is refuted by a competing neurologist, then Mr. Sterling may still be able to act as Co-Trustee—and thereby block the Clippers sale.

It’s not everyday that a $2 billion transaction turns on a lowly Trust incapacity clause, but whether your estate is large or small, the issue is important to you.

So why have an incapacity clause in a Trust at all?  It is meant to prevent people from having to go to Court to declare a Trustee incapacitated.  And the only way to “safely” determine incapacity is to have a mental exam completed by a competent physician.  But that procedure has its problems and limitations—especially where the elder refuses to cooperate.  The problem with mild dementia is that people often won’t, or can’t, admit they have a problem.  That results in a dispute as to capacity.

The irony is that the Sterlings are now in Court over a provision designed to keep them out of court.

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?

Stern Look.jpg

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.

This is not a medical blog, but medicine and the law interact extensively when it comes to determining (or challenging) a person’s legal capacity.  To prove lack of capacity requires evidence of a mental defect, such as dementia or Alzheimer’s disease.  Alzheimer’s also plays a role in proving a weakness of mind—required for undue influence.

Eye Key Hole.jpg

The problem is that dementia and Alzheimer’s is often overlooked, misdiagnosed, or not diagnosed at all even though the conditions may be present.  For example, Alzheimer’s patients can go ten to fifteen years with the disease before showing any outward symptoms.  In part, a lack of diagnoses stems from the difficulty medical science has had determining when a person has Alzheimer’s disease.

In a recent report by CNN, as reported by Dr. Sanjay Gupta, detecting the presence of Alzheimer’s disease may be possible by looking into a person’s eyes.  Dr. Gupta explains that Alzheimer’s can be detected by sticky plagues in the brain made up of proteins called “beta amyloid.”  But these proteins are very difficult to detect in the brain without doing invasive surgery.  However, researchers now believe that the same proteins found in the brains of Alzhemer’s patients may also be present in the eyes—at the back of the retina.  They are now conducting a clinical trial to see if the eye test can identify patients who are starting to develop Alzheimer’s disease.

Better diagnoses means better understanding of the disease, and a chance to address the problem before it progresses.  For the legal community, earlier diagnosis provides a better (and more accurate) idea of when an elder becomes incapacitated or susceptible to undue influence because of a weakness of mind. 


In California, proving a weakness of mind or lack of capacity requires medical evidence of a mental defect (see Probate Code Section 811).  We have come across many elders who are obviously susceptible to undue influence, yet they have no medical diagnosis of a mental defect.  As a result, their mental condition cannot be established in a Court proceeding.  By having a more accurate picture of a person’s mental capacity, the true state of their decision making abilities can be determined.  This can be a huge breakthrough to protecting elders and ensuring their true desires are reflected in their Trusts and Wills.

They say the eyes are the window to the soul, but they may also be the window to better mental health too.

(For more on signs of Alzheimer’s, see this CNN article: The 10 warning signs of Alzheimer’s.)

How does your trust help you while you’re alive?  Many people think of trusts as death planning instruments–the type of thing that only operates upon your death.

But trusts have a critically important role to play while you are alive in the event you lose capacity.  People are living longer and the likelihood of being physically able, but mentally unfit is growing.

Without a trust plan in place, a person and his money cannot be easily cared for. In fact, a court supervised conservatorship is required to manage the person and estate of people who lose mental capacity, but have no other safeguards in place for the management of their money and personal care. 

Unfortunately, conservatorships are costly, time consuming and expose everything (and I mean everything) to ongoing court supervision.  In other words, your life becomes an open book and the court decides who will make decisions for you and then tries to oversee those decisions as best it can….yikes!

Since a conservatorship takes place in court, it provides a ready forum for lawsuits.  It’s not uncommon for a person’s children to fight over who should be named as the conservator.  And those types of lawsuits can be nasty business.

But a well planned trust can avoid all of that because under the trust terms, you appoint a successor to manage your money if you ever become incapacitated.  You should also have a Health Care Directive in place so that you can name someone to make your medical decisions.  With these two documents properly prepared, your personal care and your assets can be quietly and easily managed until you return to full mental capacity.

So the next time someone tells you that a trust isn’t necessary because it only takes effect after you’re dead and gone, think again.  That trust may save you a lot of time, money and public scrutiny while you’re still alive.

In order for a person to create a valid Will or Trust they must have “sound mind.” The term “sound mind” is short hand for a rather complicated set of rules for determining mental capacity. If a person lacks proper mental capacity, then any document they sign is deemed invalid under California law. A person may lack proper mental capacity if they exhibit memory loss, or have been diagnosed with dementia or Alzheimer’s.

Surprisingly, there is more than one set of rules for testing mental capacity under California law—one for Wills and a different one for Trusts. The capacity required to make a Will (referred to as “Testamentary Capacity”) requires a person creating a Will to

  • understand he or she is creating a Will,
  • understand what property he or she owns, and
  • understand his or her relations to the persons who have claim to their assets (usually his or her children) and whose interests are affected by the terms of the Will.

Will capacity is considered the lowest form of mental capacity. In fact, a person can be deemed to lack the capacity to make a Trust, yet still have sufficient capacity to make a Will.

The mental capacity required to create a Trust is a higher capacity standard (referred as “Contractual Capacity”). In order to create a valid Trust, a person must be able to understand and appreciate the following:

  • The rights, duties and responsibilities created by, or affected by the decision,
  • The probable consequences for the decision maker and, where appropriate, the persons affected by the decision, and
  • The significant risks, benefits, and reasonable alternative involved in the decision.

The Trust capacity standard is much more stringent than the Will capacity standard requiring, among other things, a person to understand and appreciate the consequences of the decision being made. This is not a requirement under Will capacity. A person can create a Will without knowing, understanding or appreciating the consequences that Will may have on himself or others.

These two different levels of capacity are significant when creating Wills and Trusts for persons who are older or may be in the beginning stages of dementia, Alzheimer’s or memory loss. It is likely a person with the beginning stages of dementia has the capacity to create a Will, but may not have the capacity to create (or perhaps revoke) a Trust.

Best practices require that an older person, or any person, showing signs of memory loss or dementia should be evaluated by their primary care physician for a determination of the required capacity to create a Will, and further to create a Trust, before doing so. A primary care physician’s letter stating that an older person with memory loss or dementia has the capacity to create a Will (Testamentary Capacity) and further, has the capacity to create a Trust (Contractual Capacity) will be very difficult to overcome by a beneficiary or family member contesting the terms of the Will or Living Trust after the Will or Trust creator’s death.