Trusts and Estates

Ca. Trs. & Estates Quarterly 2014, Volume 20, Issue 4

SUNRISE, SUNSET: WHAT TO DO ABOUT A TRUSTEE WITH DIMINISHING CAPACITY

By John A. Hartog, Esq.1*

I. INTRODUCTION

America is aging. In 2011, about one in eight Americans was over age sixty-five.2 As the Baby Boom generation ages, the percentage of elders will increase. Over the next fifteen years, more than a thousand Californians will turn sixty-five every day.3 This segment of California’s population is expected to grow by more than 20% over the next five years. Some commentators assert that the oncoming decades will witness a transfer of about $12 trillion in wealth from those born in the 1920s and 1930s to the Baby Boomers, and that the Boomers are expected to transfer some $30 trillion in assets to their beneficiaries over the next thirty to forty years in the U.S.4

The aging population brings new challenges, including planning for, and dealing with, gradual decline in physical and mental abilities. Many individuals wish to serve as trustee of their assets for as long as possible, even when they begin to lose their faculties. The inability or refusal to recognize and respond to these impairments can create thorny legal and practical issues for the individual and concerned family. These issues are heightened when the individual is serving as the trustee of a trust with fiduciary obligations. The challenges in representing the "fading trustee" can be acute for all advisors, especially that trustee’s attorney.

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