“Both of my parents are in assisted living. Their trust needs to be changed, but I’m not sure that they will understand the necessary changes or why they need to be made.”
Most trusts are amendable, but you have to make sure that is the case, says The Times in its article “Estate Planning: Who can amend a trust?” Once you know that it is amendable, you’ll need to verify exactly who can amend it. The most logical person to do this would be the Settlors.
If the parents, who would typically be the Settlors, lack the capacity to amend the trust, things can get complicated. You’ll need to determine whether they are able to do this. If they are overwhelmed by the reasons for the change and don’t understand it, you can try to simplify it or work with a social worker who might be able to frame it in a way they can understand. However, if they can’t understand because they don’t have the mental facilities to execute an amendment, you’ll need to take certain steps to make sure any changes to a trust are done properly.
Let’s assume these parents lack the mental capacity to execute an amendment. The next step is to locate an Attorney-in-Fact (AIF), who is appointed under the terms of the Power of Attorney (POA).
There are POAs that grant the authority to an AIF to address estate issues and documents, including a living trust. If the authority is there, you must address a few additional matters.
First, does the trust allow an AIF to amend it? You’ll need to examine the provisions in the trust, to see if there are any limitations about who can make amendments. It’s possible the AIF may be permitted to do this. However, it could go either way, depending on how the trust was prepared.
Here’s another sticking point: does the AIF have “self-dealing” issues? That means whether or not the AIF is contemplating any actions that may benefit them. If the amendment to the trust could benefit the AIF, they may not be able to make the change.
If all else fails, the successor trustee may be able to docket the trust with the court and ask it to issue an order that would allow the trustee to deviate from the terms or amend the trust.
The court order will take time and money. However, it protects the person making the amendment by making it very clear that they requested and were granted the necessary permission from the court. This can be very important, if anyone questions the change to the trust.
Speak with an experienced estate planning attorney to have them examine the documents and provide their insight, as to what your best course of action may be. This is not something you want to do without proper advice.
Resource: The Times (Aug. 19, 2018) “Estate Planning: Who can amend a trust?”
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