Settlor Incompetence and The Trustee's QuandarySettlor Incompetence and The Trustee's Quandary
It can be difficult on a personal level to watch a client, whom you may have known for years, begin to lose his mental capacity. But if that client is the settlor of a revocable trust of which you are a trustee, the settlor's incompetence can also put you in a precarious legal position. In most states, so long as the settlor lives and is mentally competent, the trustee owes all duties solely to the
Eric L. Maassen & Gregory M. Monday
It can be difficult on a personal level to watch a client, whom you may have known for years, begin to lose his mental capacity. But if that client is the settlor of a revocable trust of which you are a trustee, the settlor's incompetence can also put you in a precarious legal position.
In most states, so long as the settlor lives and is mentally competent, the trustee owes all duties solely to the settlor. But what if the settlor becomes mentally incompetent? In that situation, some states' laws require the trustee to exercise his duties for the benefit of the remainder beneficiaries as well. In many states, the law is as yet unsettled, so it's not clear to whom the trustee owes the primary duty as betw...
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