Patricia Annino, in the Journal of Accountancy, writes that many clients sign estate planning documents without paying much attention to the clauses they contain. She notes that one clause that few clients pay attention to is the one governing how that client’s incapacity could be determined—and therefore how the client could be removed from serving as a fiduciary or trustee.  This was illustrated by the high-profile case in California probate court between former Los Angeles Clippers owner Donald Sterling and his estranged wife, Shelly.

Ms. Annino notes several lessons from that case, whose outcome ultimately allowed Shelly Sterling to sell the team, including the following:

  • review all boilerplate clauses in estate planning documents.
  • plan for disability or incapacity.
  • put in place checks and balances to avoid conflicts.
  • think carefully about who can determine incapacity.
  • consider consequences of a legally estranged spouse.
  • identify to whom the trustees should be accountable.
  • designate who will serve as guardian of person and property if protective proceedings begin.
  • regularly review estate plans.

See full article at Boilerplate trust clauses.

Posted by Lewis J. Saret, Co-General Editor, Wealth Strategies Journal.