Boilerplate Trust Clauses

October 30, 2014

Many clients sign estate planning documents without paying much
attention to the clauses they contain. 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. A high-profile case on this topic recently played out in California
probate court between former Los Angeles Clippers owner Donald Sterling and his
estranged wife, Shelly. Here are several lessons from that case, whose outcome
ultimately allowed Shelly Sterling to sell the team:

  • Review all “boilerplate” clauses in estate planning
  • Plan for disability or incapacity
  • Put in place checks and balances to avoid conflicts
  • Think carefully about who can determine incapacity
  • Consider the 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 commence
  • Regularly review estate planning

Click here to read Patricia’s complete article as it appears in the Journal of Accountancy.

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