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When a trustee of a trust loses mental capacity


A person losing their mental capacity can look like many different things. Essentially it means that they are no longer competent to manage their own affairs. Since most trustee decisions have to be unanimous, a trustee losing their mental capacity has the effect of preventing the (remaining) trustees from being able to legally function. Historically, this has given rise to all sorts of problems – particularly with regard to trusts that own real estate.

The following scenario is common:

Jack*, Jill* and their daughter Mary* were the trustees of the Jack & Jill Family Trust. The Trust owned the family home where Jack and Jill lived.

Jack’s mental condition had deteriorated to the point where he required a level of care that was now beyond Jill’s ability to provide. Jill wanted the trustees to sell the family home and help both Jack and herself move into more suitable accommodation.

Jill and Mary were worried that Jack’s mental incapacity might give rise to some legal difficulties. Difficulties which historically have often been quite a challenge for trustees to overcome.

At Lucas and Lucas we guided the family through the process of:

1. Retiring Jack as a trustee and updating the Trust’s property records; 2. Selling the family home; and 3. Making some of the proceeds available to assist Jack and Jill with moving into a retirement village.

* Names have been changed.

For further information contact us or call (03) 477 8080

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