What Counts as Incapacitation in a Living Trust?
However morose it may sound, as responsible human beings we must plan for the dimmest future. You may be happy and healthy right now, but that doesn’t mean you are going to be just so forever. One day, like everyone else, you will leave the world, bequeathing your prized possessions to your heirs. Besides mortality, your physical and mental capacity is also not in your control. If you are declared mentally ‘incapacitated,’ your financial decisions will be taken by an appointed ‘guardian.’
When you set up a living trust on Long Island, you allow a trustee to manage, invest, and divide the assets contained in a trust. But because it is revocable in nature, you can choose to modify the trust document whenever you wish, changing the terms or the names of trustees and beneficiaries. This is only possible as long as you are alive. Once you pass away, the trustee retains complete control of the contents.
Besides mortality, your mental capacity is also responsible for determining whether you can control your trust. If you are declared ‘incapacitated,’ all decisions regarding a trust will be taken by the appointed trustee (or substitute trustee) for all intents and purposes. Here’s what it really means.
When dealing with the law, there is an underlying assumption that adults have ‘capacity,’ which is the ability to make sound decisions for themselves. They evidently have their own interests at heart, and they are the ones best-suited to choose the best in their favor. Sometimes, this ability is contested when an individual is declared ‘incapacitated,’ or unable to make sound decisions for herself.
The Incapability of Making Decisions
The belief that adults can make their own best decisions comes from the American constitution. We are all ‘individuals’ with ‘unalienable’ rights. We are expected to know the implications of the personal and financial decisions we are making in our lifetime so that we can choose the best possible options for ourselves.
But what if an adult is not capable of making decisions concerning their health and finances? It could be because of a stroke, a congenital disease, a neurological condition (like dementia or Alzheimer’s), an injury, or a degenerative disorder. While physical ability matters little in these matters, mental incapacity affects your ability to make decisions that are in your best interests.
A Court Examination
If a grantor has become mentally incapacitated, the trustee or beneficiary would have to get it confirmed with a medical professional and then verified in court. The judge will take into account the grantor’s condition then decide whether or not they should be declared incapacitated.
The procedure for getting declared incapacitated is not always seamless. In the 90s, New York State ensured procedural safeguards for those allegedly incapacitated. As of now, there is a keen emphasis on the protection of the individual’s right to autonomy and self-determination. While this is more related to Guardianship and healthcare decisions, a living trust on Long Island operates on similar principles.
Right to AppealThe law keeps a special lookout for those who are claimed to be incapacitated. The declared person has every right to contest the claim and assert that they are capable of making personal decisions without external help. They can get in touch with their estate planning attorney to help them with the basics of such an appeal.
Incapacitation in a Living Trust
Once you have been declared incapacitated, the trustee (or a substitute one if you are the trustee of your own living trust on Long Island) will take care of your finances during the period of mental incapacity. If you haven’t named anyone as an alternative, a guardianship proceeding would have to be initiated in court.
Protecting Yourself Beforehand
If you are worried that your assets are not protected enough, you can ask your lawyer to make sure the trust document is foolproof. If you add a list of criteria for declaring incapacity, such as an official letter from your family physician or two separate medical professionals, the trustee will have to fulfill these terms before getting incapacity declared. It all comes down to the trust contract and how well it has been drafted by your estate planning attorney.
Incapacitation planning is a large part of your estate plan and it should be looked into thoroughly. And while you’re at it, ask your attorney the right questions when you are in the process of setting up a trust. If the right provisions are made in the document, you will generally be safe from potential harm.