Your mother created a living trust years ago. She named you as her successor trustee, signed the documents, and put everything in a binder. You assumed that if she ever needed help managing her finances, you would be able to step in and take care of things.
Now, her memory is declining. Bills are going unpaid, she is having difficulty managing her accounts, and you are concerned about her ability to make financial decisions. You contact the bank to explain that you are the successor trustee, only to discover that being named in the trust does not automatically give you the authority to act.
This is something families often misunderstand about California estate planning. A living trust can make it much easier to manage someone’s financial affairs during incapacity, but the transition from the original trustee to the successor trustee still needs to happen properly. If you are taking over as successor trustee for a parent who is still living, there are several things you need to understand before you begin making decisions on their behalf.
Being Named as Successor Trustee Is Not the Same as Having Authority to Act
Most people who create a revocable living trust serve as their own trustee while they are alive and capable of managing their affairs. They name a successor trustee, often an adult child, to take over if they become incapacitated or after they pass away. However, the trust generally establishes specific circumstances under which that person may assume responsibility, and those requirements need to be followed.
Some trusts require written certifications from one or two physicians confirming that the current trustee is no longer capable of managing their financial affairs. Others authorize designated individuals to make that determination or provide a different procedure entirely. There is no universal California rule requiring two physician letters before a successor trustee can act. What matters is the language of the trust and the applicable law.
This is why I always want to review the complete trust, including any amendments or restatements, before advising someone that they have the authority to take over. A later amendment may have changed the successor trustee, and the provisions governing incapacity may be different from what the family remembers. There may also be a surviving spouse or another cotrustee who has the authority to continue managing the trust. Simply being the next person named does not necessarily mean it is your turn to serve.
Taking Over as Successor Trustee Requires Proper Documentation
Once incapacity has been established under the trust’s terms, the next step is documenting the transition. Depending on the circumstances, this may involve obtaining the required medical certifications or other evidence of incapacity, preparing a written acceptance of trusteeship, and documenting that the conditions for the successor trustee to assume office have been satisfied.
Under California law, a named trustee may accept a trusteeship through a written acceptance or, in certain circumstances, by exercising trustee powers. I generally prefer a formal written acceptance because it creates a clear record of who is serving and in what capacity. It also gives financial institutions and other third parties documentation they may need when reviewing the change in trusteeship.
A Certification of Trust may also be necessary. This document identifies the currently acting trustee and confirms certain information about the trust and the trustee’s authority without requiring disclosure of every provision of the trust. Financial institutions may request additional documents before recognizing the successor trustee, and if the trust owns real property, appropriate documentation of the change in trusteeship may also need to be recorded with the county recorder.
A properly prepared trust can allow this transition to occur without court involvement, which is one of the significant benefits of having a living trust in the first place. However, that does not mean the successor trustee can simply walk into the bank with a copy of the trust and immediately begin managing the accounts. The proper documentation needs to be in place so that the successor trustee can establish legal authority when dealing with banks, investment companies, title companies, and other third parties.
A Living Trust Does Not Give You Authority Over Everything Your Parent Owns
One of the first things I look at during a trust administration review is how the assets are actually owned. Your parent may have a comprehensive living trust, but that does not necessarily mean every account or asset is held in the trust. The family home may be titled in the trust, while a checking account remains in your parent’s individual name. Retirement accounts generally remain individually owned, and certain assets may pass through beneficiary designations rather than through the trust.
Your authority as successor trustee generally extends to the assets held by the trust. It does not automatically extend to everything your parent owns, which is why a durable power of attorney is another essential part of a comprehensive estate plan.
A properly drafted financial power of attorney allows the designated agent to handle certain financial matters outside the trust, depending on the authority granted. The agent under a power of attorney and the successor trustee may be the same person, but they are acting under different legal authority. There is also a separate role for the healthcare agent designated under an Advance Health Care Directive. Being the successor trustee does not, by itself, authorize you to make medical decisions for your parent.
When these documents are coordinated, they can work together to provide more complete protection during incapacity. When they are missing, outdated, or inconsistent, families can find themselves unable to handle important matters even though a living trust exists. I have seen situations where the trust itself is perfectly adequate, but the family encounters problems because certain accounts were never transferred into the trust or the accompanying estate planning documents were never properly completed.
Your Responsibility Is to Care for Your Parent, Not Distribute Their Inheritance
When you take over as successor trustee because your parent has become incapacitated, your responsibility is generally to manage the trust according to its terms and for the benefit of the people it is intended to protect. In many revocable living trusts, that means using the trust assets to provide for your parent’s needs during their lifetime. Your role is not to begin dividing up the estate or treating the trust assets as an inheritance that is simply waiting to be distributed.
As successor trustee, you may be responsible for paying household expenses, managing investments, maintaining property, coordinating payments for care, and making sure sufficient resources are available as your parent’s needs change. You also assume fiduciary responsibilities, which means you must act within the authority granted by the trust, manage trust property prudently, maintain appropriate records, and avoid using trust assets for your own benefit unless the trust and applicable law permit it.
Your parent’s incapacity does not automatically mean that the trust assets are available for distribution to the children or other remainder beneficiaries. It also does not necessarily make the entire trust irrevocable. Those questions depend on the terms of the trust and the circumstances, including whether one spouse has already died.
I also encourage families to remember that needing assistance with financial management does not mean a parent should be excluded from every decision. A person may still be able to express meaningful preferences and participate in decisions about their care and daily life, even when someone else has assumed responsibility for managing the trust. The purpose of incapacity planning is to protect the person who created the plan, not simply to transfer control of their property to the next generation.
What Happens When the Trust Doesn’t Work as Expected?
Unfortunately, not every trust provides a straightforward path for a successor trustee to assume responsibility. Sometimes the trust was prepared decades ago and has never been reviewed. The person named as successor trustee may no longer be available, or the provisions for determining incapacity may be difficult to satisfy. Other times, family members disagree about whether the parent is incapacitated or who should be making decisions.
These situations can become particularly challenging when financial decisions cannot wait. There may be questions about the validity of an amendment, the authority of a cotrustee, or whether the successor trustee has properly assumed office. In some cases, the family may not even have a complete copy of the trust and all its amendments, making it difficult to determine who has the authority to act.
California law provides procedures for addressing certain trust disputes and trustee appointments through the probate court. Depending on the circumstances, a court may need to determine the trustee’s authority, interpret provisions of the trust, or appoint or remove a trustee. If important assets are outside the trust and there is no effective power of attorney or other available authority, a conservatorship may also need to be considered.
Fortunately, not every problem requires court intervention. Many can be resolved by carefully reviewing the existing documents, identifying the applicable legal requirements, and completing the appropriate steps to establish the successor trustee’s authority. The earlier these issues are identified, the more options a family may have to address them without unnecessary expense or conflict.
Review the Plan Before Someone Needs to Use It
When I work with clients on their estate plans, I want to know that the documents will function when their families actually need them. That means looking beyond who is named as successor trustee. We need to consider how incapacity will be determined, whether the people selected are still appropriate, whether the trust is properly funded, and whether the powers of attorney and healthcare directives work alongside the trust.
For families with aging parents, reviewing these matters before a significant decline in capacity can make an enormous difference. It also helps to have conversations while your parent is still able to participate. Knowing where the documents are located, who the financial advisors are, how accounts are titled, and what your parent wants for their care can make a difficult transition much more manageable.
If your parent is already experiencing cognitive decline, it is particularly important to review the trust before taking action. Depending on the circumstances, there may still be planning opportunities, or the focus may need to shift to working within the authority provided by the existing documents. Either way, understanding what the trust actually requires is the starting point.
At Cheever Law, I help California families with both estate planning and trust administration, including situations where a successor trustee needs to assume responsibility during a parent’s lifetime. If you have been named as a successor trustee and are unsure whether you have the authority to act, I encourage you to have the trust reviewed before making financial decisions. Establishing your authority properly and understanding your responsibilities can help protect your parent, the trust assets, and you.
Plan for reality. Protect your legacy.