Should You Let Your Successor Trustee Remove You Without a Doctor’s Certification for Incapacity?
Estate planning often involves preparing for the possibility that you may one day become unable to manage your own affairs. In California, a well-crafted revocable living trust includes provisions for what happens if the person who created the trust (the settlor or grantor) becomes incapacitated. A key question is how to determine incapacity: Should your successor trustee (the person who takes over management of the trust) be allowed to declare you incapacitated and assume control without a doctor’s certification?
This blog post will explore what incapacity means in a trust context, typical trust provisions requiring medical confirmation, the option of giving your trustee discretionary authority, and the legal implications, risks, and benefits of each approach. We’ll focus on California law and best practices to help you make an informed decision, and we’ll emphasize the importance of tailoring your trust to your needs with professional guidance.
Understanding Incapacity in a California Trust
Incapacity, in the context of trusts and estate planning, generally refers to an individual’s inability to manage their affairs due to mental or physical impairment. Importantly, legal incapacity is not just a medical diagnosis – under California law, it is determined by evidence that a person has deficits in mental function that impair their ability to understand and make decisions. In other words, just being diagnosed with an illness like dementia does not automatically mean you are legally incapacitated. Incapacity means you are no longer capable of making informed decisions about your finances or property, such that someone else needs to step in for your protection.
In a typical living trust, you (the settlor) act as the initial trustee and manage the trust assets as long as you are able. If you lose capacity (or upon your death), a successor trustee takes over management of the trust. This arrangement ensures continuity of financial management without court intervention. The challenge is deciding when that handover occurs – essentially, how to confirm that the settlor/trustee is incapacitated and it’s time for the successor trustee to step in.
Typical Trust Provisions for Incapacity (Doctor’s Certification)
Most California estate plans include an incapacity clause in the trust document that spells out how incapacity is determined. Commonly, trusts require some form of medical certification to declare the settlor incapacitated. For example, the trust might say that the settlor will be deemed incapacitated when one or more licensed physicians examine them and provide a written statement or letter that the person can no longer manage their affairs. It is not unusual for a “typical trust” to specify that a physician – or even two independent physicians – must certify in writing that the settlor is incapacitated before the successor trustee can assume control.
Such a doctor’s letter (or letters) serves as an objective standard. It provides clear evidence that a medical professional has evaluated the person and concluded they lack capacity to handle financial matters. This process can protect the settlor from being removed as trustee prematurely or improperly. It also gives the successor trustee and other interested parties confidence that the transition of power is justified. In practice, once the required medical certificates are obtained, the successor trustee presents those documents along with the trust to banks and other institutions to prove they now have authority to act on behalf of the trust.
However, the medical certification approach has downsides. A requirement for one or more physicians to certify incapacity adds protection but also delays action. It can take time to get doctor appointments and evaluations, especially if multiple opinions are needed. The primary physician might need to refer the patient to a specialist for a second opinion, further slowing the process. During a health crisis or rapid decline, these delays could hamper the timely management of the trust assets. For instance, bills might go unpaid or investments unmanaged while everyone waits for the proper paperwork. Additionally, some doctors may be reluctant to officially declare a long-time patient incapacitated without thorough evaluation, or privacy laws might complicate information-sharing without the right authorizations in place.
In summary, most trusts use a doctor’s certification as the trigger for incapacity: this is a time-tested method that provides an impartial determination and helps prevent abuse. The trade-off is that it can be procedurally cumbersome. As a result, estate planners and clients have looked at alternatives to the strict medical certification requirement.
Giving Your Trustee Discretion vs. Doctor Certification
Is it wise to allow your successor trustee to decide you’re incapacitated without needing a physician’s letter? This essentially means giving your trustee (or another group of people) the discretionary authority to remove you as trustee based on their own judgment of your condition. This approach can take different forms. One option is a single decision-maker – for example, your successor trustee (perhaps a spouse or adult child) could have the power to determine that you are no longer able to handle the trust. Another option is forming a small committee – often called a “disability panel” or “capacity committee” – consisting of several individuals you trust (family members, friends, possibly an advisor) who, by majority vote, can decide that you are incapacitated for purposes of the trust. In either case, the trust would not require a doctor’s certification; instead, it would rely on the judgment of the person or people you designate.
This modern approach has some clear advantages:
Speed and Efficiency: Decisions can be made quickly, without waiting for medical appointments or paperwork. A trusted family member or panel can observe your condition and act immediately if you’re clearly unable to continue as trustee. This quick action can protect the trust assets and ensure bills, taxes, and caregiving expenses are handled without interruption.
Privacy and Dignity: Handling incapacity within the family keeps the matter private and family-oriented, rather than involving courts or outside doctors. It’s less adversarial and often more respectful of the elder’s dignity.
Familiarity with the Situation: The people you choose (your successor trustee or panel members) likely know you and your behavior well. They may recognize subtle signs of cognitive decline or incapacity that a doctor — especially one who sees you briefly — might miss. Because they understand your personality and wishes, they might be better positioned to determine when you truly can’t manage your affairs.
Avoiding Court Conservatorship: By addressing incapacity in the trust document (whether via a doctor’s note or discretionary panel), you avoid the need for a formal conservatorship through the probate court. If your trust didn’t specify how to judge incapacity, a loved one might have to petition a court to declare you incompetent – a costly, time-consuming, and public process.
Despite these benefits, granting your successor trustee or a panel the power to remove you without a physician’s input also carries risks and concerns:
Subjectivity and Potential Bias: A medical professional brings objectivity and a standardized evaluation to determine incapacity. In contrast, a family member or friend’s judgment might be subjective. They could misinterpret normal aging (like momentary forgetfulness) as incapacity, or there may be interpersonal dynamics at play. For example, if your successor trustee is also a primary beneficiary of the trust, conflicts of interest could arise.
Family Conflict: If not all family members are involved in the decision, those left out might question the timing or validity of the move to remove you as trustee. Siblings, for instance, might suspect that the sibling who is successor trustee declared Mom incapacitated “too early” in order to control the assets.
Ambiguity in Standards: When a trust relies on a doctor’s certification, there’s a clear threshold – typically the doctor must conclude you cannot manage your financial affairs. But if using discretion instead, the trust must be very carefully drafted to define how incapacity is determined. Examples of such standards might include requiring the successor trustee to document specific signs of cognitive decline, such as an inability to pay bills, confusion about finances, or erratic decision-making over a defined period of time. Other trusts might require the observations to be corroborated by a neutral third party or presented in writing to other beneficiaries before the successor can act. Still others might authorize action based on a majority vote from a designated panel of trusted individuals. The clearer these criteria are spelled out, the better protected all parties will be.
No Automatic Medical Evaluation: One practical downside of not requiring a doctor’s note is that you might miss the benefit of a professional medical evaluation. In some cases, what looks like cognitive decline could be treatable (for example, a medication issue or infection).
Legal Implications Under California Law
From a legal standpoint, California allows a trust to set its own rules for trustee succession on incapacity. The law does not mandate a physician’s certification; it’s up to what the trust document says. Courts will generally uphold the trust terms, meaning if you expressly authorize your successor trustee to determine incapacity without a doctor, that process is valid.
If a dispute arises – say, you object to being removed, or another beneficiary challenges the successor trustee’s actions – the court may get involved to resolve whether the trustee properly followed the trust’s procedure and acted in good faith. California Probate Code §15642, for instance, allows a court to remove a trustee for cause (including incapacity or breach of trust).
Once a successor trustee is authorized to take control—whether through a doctor's certification or a discretionary panel's decision—they will typically sign a document acknowledging their acceptance as successor trustee. They must also provide documentation to third parties (such as banks or financial institutions) proving that the conditions for their succession have been met. In the case of a discretionary panel, this may include a signed statement from each panel member affirming the determination of incapacity in accordance with the trust’s provisions. The successor trustee would then present this documentation, along with the trust itself and any required identification, to financial institutions to gain access and control over the trust assets.
Structuring Your Trust: Which Approach Is Right for You?
When deciding how your successor trustee can take over in the event of your incapacity, consider your personal circumstances and preferences:
Your Level of Trust in Individuals;
Family Dynamics;
Practical Considerations;
Use of a Disability Panel;
Successor Trustee Selection
There is no one-size-fits-all answer to whether a successor trustee should have the power to remove you without a doctor’s certification. For some, the priority is safeguarding against misjudgment or misuse, so they prefer the formality of medical certifications. For others, the priority is avoiding delays and bureaucracy, so they grant more leeway to the people they trust.
Get Professional Guidance to Tailor Your Estate Plan
Given the complexities involved and the high stakes – your financial welfare and autonomy – it’s wise to consult an experienced California estate planning attorney when structuring your trust’s incapacity provisions. A knowledgeable attorney can explain the latest best practices and legal nuances.
In conclusion, should your successor trustee have the power to remove you without a doctor’s certification? It depends on your comfort level and priorities. By understanding the definitions, typical practices, and pros and cons discussed above, you can make an informed choice. What’s most important is that your trust clearly addresses incapacity in some way. With professional guidance, you can strike the right balance between protection and flexibility, ensuring that your estate plan works the way you intend – even if “the inevitable” happens and you can no longer manage things yourself. Take the time to get this planning right now, so that you and your loved ones are prepared for whatever the future may hold.
Need help with Incapacity Planning, Estate Planning, Trust Administration, Probate, or Business Law? Devey Law is here for you. Call us at 805.720.3411 or email info@deveylaw.com to schedule a consultation.
This blog is for informational purposes only and does not constitute legal advice. Reading this blog does not create an attorney-client relationship between you and Devey Law, A Professional Law Corporation. Laws and regulations may change, and the information provided may not reflect the most current legal developments.
