The Seven Disability Questions That Must Be Answered When Setting Up a Trust in California

In every set of Trust documents that we prepare, there are seven questions that must be answered dealing exclusively with disability planning. When Trust documents are submitted for our review, many, if not all, of these questions are not answered in the Trust documents. Sometimes an entire document is missing, other times the documents exist, but the language addressing the issue is missing or drafted incorrectly. These are not easy problems to spot, you have to know what you are looking for and where to look.

Does the Trust Provide for Temporary Assistance When the Then Acting Trustee Is Temporarily Unable to Perform Their Duties?

For example, if the surviving spouse serving alone, falls, breaks a hip and ends up in the hospital, who writes the checks, pays the bills, and does all the things that they did before they ended up in the hospital? To be certain, the question is not who replaces the trustee? In this situation, replacing the trustee would not be appropriate, however, some temporary help is needed. The provision we are looking for is a “Silent Partner Co-Trustee.” Most trusts we review don’t have one. To use an analogy, a silent partner co-trustee is like having a co-pilot for the pilot. Ironically, the F.A.A. won’t allow the pilot of a commercial airline to fly without one. Ironically, most Trusts we review don’t have Silent Partner Co-Trustees.

What Is the Method for Replacing a Trustee When They Can No Longer Serve?

There are two parts that need to be addressed in this question, the legal part and the practical part. Most of the methods used today are inefficient and outdated.

Keep in mind, removing a person who is not able to serve is difficult, especially when the person does not know that they are not able to serve as trustee. This usually involves some type of dementia. Respectfully, it is difficult to remove a person as trustee when they are not aware that they have a problem. In addition, the trustee’s doctor may be reluctant to release personal, protected medical information about the trustee’s condition. There are both Federal and California restrictions preventing access to a person’s medical records. As a result, if you cannot obtain the cooperation of the trustee and the doctor, the trustee cannot be removed. We have discovered the most efficient and effective method for removing a trustee, it is called a “Disability Panel.”

The panel is a group of people, hand-picked by the trustee, to determine when the trustee should be removed. The people on the panel are typically close relatives such as a spouse and children, or a good friend who knows you very well. In other words, people that you trust to make the decision. Typically, the number of panel members will consist of three or four people. There’s no exact number. Whatever number you’re comfortable with is the appropriate number of people to put on the panel. The key is, do you trust them to make a decision as to your qualifications to serve as trustee?

Does the Trust Contain a Disability Trustee?

This is a person that is designated to serve in the event that the current trustee can no longer serve due to disability.

This is very different than choosing an Executor or a Death Trustee who take over when you pass away. A Disability Trustee is a person you appoint to assume the responsibility of taking care of your needs when you are still alive, but no longer able to serve as trustee. A Disability Trustee is a person who will manage the estate during that period of time when you are disabled and perhaps vulnerable. Their job in a nutshell is to take care of you.

Does the Estate Planning Portfolio Contain an Immediate, Ancillary, Financial Power of Attorney?

First of all, this document is completely separate and apart from the Trust. Some portfolios don’t have one and yet they are a critically necessary tool when the trustor becomes disabled.

Notice the two descriptive terms, “immediate” and “ancillary.”

Immediate refers to when the power of attorney becomes effective, “immediately” upon signing. In other words, when you sign the document, you are giving your agent immediate authority to sign your name. Why immediately? Because we don’t know exactly when you will need the agent to sign your name. The opposite of an Immediate Power of Attorney is a “Springing Power of Attorney.” With this document, the agent needs to prove the incompetency of the principal before they can sign anything. Signing this type of power of attorney means you’re nervous about giving the agent the power. The solution isn’t to put an obstacle in front of your agent. The solution is to have the power so carefully drafted and precise that the agent couldn’t do anything inappropriate even if they wanted to. Since the client is unaware of the differences in the various powers of attorney, often the wrong one is provided. Our firm will never prepare a springing power of attorney because of the various challenges and time delays associated with proving incompetency.

The second term, “ancillary” describes the powers given in the documents. The powers in this document should supplement the powers contained in the Trust. Most often we discover the Power of Attorney simply duplicates the powers already contained in the Trust. Unfortunately, most clients are not aware of the purpose of the power of attorney. This makes it impossible to determine by reading the document whether it contains the necessary powers.

Does the Estate Planning Portfolio Contain a Legally Correct Advance Health Care Directive?

Surprisingly enough, the answer to this question is often, “No.” The purpose of this document is to appoint a person to make medical decisions for you when you cannot make them yourself. Obviously, it is one of the most important documents in the portfolio. And yet we often see legal mistakes in this document. If the client is the one that prepared the document (and sometimes this is the case), mistakes are understandable.  However, too often we see incorrect language in documents drafted by a client’s estate planning attorney in San Diego. Unfortunately, the client is relying on the attorney’s skills to draft a legally correct document and when they discover the problems, it is often too late. In some situations, we will discover several of these documents in the portfolio and their agents and powers are inconsistent with each other. This is one situation when more is not better!

Does the Estate Planning Portfolio Contain a “Stand-Alone” HIPAA Release Form?

This document allows the hospital to release medical information about you to family and loved ones. This document does not give anyone the authority to make decisions on your behalf, only the right to receive information about you. This document should accomplish two things. First, it should be a separate document, not part of the trust, not part of the financial and definitely not part of the Advance Health Care Directive, where we see it a lot of the time. The law is very clear on this and yet the mistake is made quite often. Second, the HIPAA should indicate in the document, those individuals allowed to receive protected medical information without referencing other legal documents (which may not be available at the time of the emergency).

Are the Advance Health Care Directives Available When the Emergency Arrives?

There are only two documents in the entire Estate Planning that are needed in an emergency (and they are usually not available). There is a reason why it’s called an emergency room. Most people don’t plan on being there. So, if you are there, did you bring your Advance Health Care Directive and your HIPAA form with you? Probably not. However, if you think about the purpose of these two documents and when they are used, isn’t it shortsighted not to have a method of accessing them whenever you show up to the emergency room? Upon signing their “emergency documents” each of our clients are given a plastic card the size of a credit card that fits nicely in their wallet or purse. On the plastic card, are 3 pieces of information, the name of a website (owned and maintained by our firm), the client’s Membership Number and their Personalized Identification Number(PIN). When checking into the emergency room, the patient will be asked for their “emergency” documents. All they need to do is hand this self-explanatory plastic card to the nurse. The nurse will go to the hospital’s computer, enter the website, (it is listed on the card), enter the membership number and the PIN (also listed on the card). Immediately on the screen appears the Advance Health Care Directive, and the HIPAA form. In addition, any medical information can also be entered into your profile, such as allergies, personal medications, purpose and dosage.

In the event that you are rolled into the emergency room and not in a position to communicate to those attending you. Typically, they will locate your driver’s license to determine who you are and to see if there is an allergy sticker on the license. We provide our clients with a sticker to place on their license directing the health care worker to the card which is just behind the license. As indicated, the card is self-explanatory and, without you lifting a finger, the emergency documents are available 24 hours a day, 7 days a week, anywhere in the world.