The Revocable Trust is the centerpiece of the estate plans that my clients usually adopt. This kind of trust, which I will abbreviate “RevTrust,” is not only a Last Will substitute, but it also can also address the contingency of the client’s disability. For just as assets “inside” a RevTrust at the client’s death will avoid “probate,” so upon the client’s disability they can avoid court proceedings designed to manage those assets in the absence of a competent owner, proceedings known in Florida as “guardianship proceedings.”
It is no accident that the same group of circuit judges who manage probate proceedings in Miami-Dade also manage guardianship proceedings. In many ways, the two kinds of proceedings are the same, but in important ways guardianship is more complicated and can be more expensive. In probate proceedings, the owner of the assets is deceased. But in guardianship proceedings he is still alive, and he is, legally speaking, helpless and mentally or physically vulnerable. There is a layer of personal-care responsibility for that helpless person (called “the Ward”) that the law overlays on guardianship proceedings that does not exist in probate. Probate proceedings move toward finality, the distribution of the assets to the beneficiaries. Guardianship proceedings, however, have no such dynamic. They are ongoing until the Ward regains his capacity or passes away. Assets in a RevTrust not only avoid probate, they also avoid guardianship proceedings. Therefore, many of my clients will have a RevTrust at the center of their estate plan, not just for death time purposes but also for the contingency of disability.
When a married couple adopts RevTrusts for their estate plans, in most cases they should be Co-Trustees of their respective trusts. Often trust agreements in that situation will say that if one of the two Co-Trustees is unable or unwilling to serve, then the remaining Trustee shall serve alone. If we have an older couple as our clients, however, then we often recommend that the trust agreement also provide that if one of them becomes unwilling or unable to continue to serve as a Co-Trustee, then a trusted and available younger person shall take his place as Co-Trustee. The trust agreement would also state that when the Co-Trustees are composed of the original two, our husband and wife, or one of them and the younger person, then either of the Co-Trustees may act for them both. In other words, as to third parties: banks, insurance companies, stock brokers, the IRS, etc., either of the Co-Trustees may act for the two of them without them both having to sign or consent to any particular trustee action.
We adopt this approach because, if the first of our two original trustees becomes unable or unwilling to continue to serve, it will usually be because of that person’s declining ability or death. In such a case, the other spouse, the able spouse, may herself (or himself) not be far away from a decline either. We anticipate that vulnerability by bringing in another person immediately to serve as the Co-Trustee of the able spouse. We do not wait for the well-spouse to reach disability before having the younger person on hand as the new Co-Trustee.
For example, we have Tom and Janie, husband and wife, in their mid-seventies. They are the Co-Trustees of their respective trusts. Tom is stricken, and Janie certainly can serve alone, but under the terms of their trust agreements son Philip immediately assumes the office of Janie’s Co-Trustee. The understanding is that Janie remains as active as she wishes, just as if she were the sole Trustee, but Philip gets copies of the various account statements and keeps up to date with his mother’s situation. He is a back-up with full authority to step in without any red tape having to be cut. If Janie should begin to fade, there are no doctor’s certificates to obtain concerning her decline, often requiring a special visit, and no embarrassment for Janie. Philip is already a full Co-Trustee with his mother. He can assume responsibility as Janie releases hers.
As my clients enter the later years of their lives, when disability or even death are increasing risks, we have them act not only as Co-Trustees for each other, but we also line up who will succeed the first spouse to become unwell or pass away. In this way, the well-spouse has a ready partner to manage the trusts against the day when she also declines into disability or death or simply wants to resign.