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By Liza Horvath


Unintentional Results


Tom and Susan Madison had, for almost two decades, used a particular group of money managers for help and advice when it came to finances. These three professional investment managers worked for a large bank and, aside from investment management, would also bring all the best services that the bank had to offer to the Malisons. The managers helped Tom and Susan invest and grow their personal investment portfolios and also worked with them to establish individual retirement plans, get a great rate on a mortgage for the Madison home and even helped Tom and Susan set up education accounts for their grandchildren. The money managers were smart, savvy and had access to excellent financial services.  


When it came time for Tom and Susan to prepare their estate plans and name an executor and trustee, they naturally turned to their trusted financial advisors. The bank that the money managers were associated with had an established trust department so the legal plan drawn up by the Madison’s estate lawyer named the bank as their successor trustee. Years went by when Tom, at the age of 80, died. Susan continued on – working with her trusted money managers and knowing that when the time came and she could no longer act as the trustee of the Madison Family Trust - due to incapacity or death - the bank would step in as her successor trustee and her trusted money managers would continue their prudent management of her estate. All would be well.


Several years went by and Susan was diagnosed with dementia. As the condition progressed, it became clear to Tom and Susan’s children that she could no longer handle the day-to-day finances of the now substantial estate that the Madison’s had amassed. The trust stated that if the trustee – in this case Susan – was found incapable of managing trust assets, the named successor, which was the bank, would step in to continue the administration. The Madison’s children were aware of the relationship Tom and Susan had with the money management team and felt that they – in conjunction with the bank – would do a good job as the successor trustee. 


A “good job” in this case would mean that the bank would take over paying Susan’s bills, arrange for health care – either in-home care providers or a suitable care facility, and would take care of the other administrative duties associated with the trust.


The Madison children contacted Susan’s doctor, arranged for a capacity determination, and the waited. The adult children of Tom and Susan had honest expectations that the money managers and the bank, working together, would help keep Susan comfortable and safe for the rest of her life.  They were going to be disappointed.


The Madisons names have been changed in this column but this situation is real. Did you know that a named successor trustee in a document is not required to act – even when it is necessary for the continued well-being of the client? Next week’s Senior Advocate will show how one family’s expectations were not met and how they are doing what they can to safeguard their mother and keep the estate intact.


Liza Horvath has over 30 years experience in the estate planning and trust fields and is the president of Monterey Trust Management, a financial and trust management company. This is not intended to be legal or tax advice. If you have a questions call (831)646-5262 or email liza@montereytrust.com










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