Many living trusts have rules in them about the transfer of power from one trustee (sometimes the person who created the trust), to the next (or successor) trustee. Of course, if a serving trustee dies, its apparent that there is a need for the next successor trustee to take over.
But what happens when a serving trustee begins to suffer from Alzheimer's Disease or another disabling illness? As the next successor trustee, how do you know at what point you should remove the serving trustee and assume the role yourself?
Trust agreements commonly include a definition of disability or incapacity. Often, a determination that an individual is disabled requires a written statement from at least one or more physicians.
The difficulty arises when you, as the next successor trustee, are not authorized under the federal privacy law known as HIPAA (Health Insurance Portability and Accountability Act of 1996) to obtain medical information about the serving trustee sufficient to determine whether they are capable of serving as trustee or not.
To address this issue, some trust agreements now contain a statement indicating that the creator of the trust requests that each successor trustee sign a statement authorizing the release of medical information to a subsequent successor sufficient to determine whether or not they are capable of serving as trustee. One way to do this might be to incorporate such a statement into the successor trustee's acceptance of trust.