What happens when a trustee can no longer manage trust assets? Imagine a scenario where your mother and father are getting older and, with each year that goes by, it becomes more and more difficult for them to perform functions that used to be very simple: going to the bank by themselves, writing their own checks, filing their taxes, making basic health care decisions, etc. Unfortunately, this happens very often and it can happen very quickly in some cases.
One possible solution is for your parents to place you on their bank accounts so you can handle those banking transactions. Seems like a good idea, right? While this allows you access to your parents’ funds, it creates a greater problem of liability and risk. When you are added as a joint owner on a bank account, in some circumstances those funds are treated as though they belong 100% to you. This can cause major issues when you have creditors, go through bankruptcy, or get a divorce. Your parents’ funds are now at risk of being lost.
There is a much better solution—a trust. The beauty of a trust is that anyone in the world can be named trustee of the trust, without the risk typically associated with jointly held assets. The trustee has a fiduciary duty to the person who made the trust, the trustor, to take care of the assets and provide for the needs of the trustor. This is the perfect situation for a parent who can no longer manage his bank account. Instead, he can appoint his daughter to serve trustee and thus be able to handle all of the parent’s financial affairs. If the child were be sued, there is no risk of losing the funds in her father’s bank account because the daughter was only managing the assets; the daughter never owned the assets.
A trust provides for a seamless transfer of the ability to manage assets for someone who cannot do it for himself. If you can imagine a scenario where this would be beneficial to you or to anyone else in your family, please give our office a call so we discuss if a trust is the best solution for you.
About Morris Hall:
At Morris Hall, we have focused our legal practice on estate planning for over 40 years. Along with estate planning, our attorneys help clients and their families with matters of probate, trust administration, wills, power of attorneys, business planning, succession planning, legacy planning, charitable gifting and other important legal aspects. We also have divisions in financial, real estate and accounting to help you incorporate all of your planning together, ensuring that everything works perfectly for your needs and situation. Our Arizona offices are located in Phoenix, Mesa, Scottsdale, Cave Creek, Tucson, Prescott, Flagstaff and Arrowhead. Our New Mexico offices are located in Albuquerque, Las Cruces and Santa Fe. Contact us today at 888.222.1328 to schedule an appointment!
This blog should be used for informational purposes only. It does not create an attorney-client relationship with any reader and should not be construed as legal advice. If you need legal advice, please contact an attorney in your community who can assess the specifics of your situation.