Up until now, we have discussed what the benefits of a trust are after death. However, there are major advantages during life as well.

For example, let’s say you have a stroke and become incapacitated. Your physical or mental impairment prevents you from managing your affairs, and your spouse or family must apply to the court to have a conservator appointed. Usually an attorney is hired to represent you. Conservatorship is a legal proceeding like probate; it’s expensive, it takes time, and can be a very humiliating affair.

The court requires a strict accounting of all expenses, and they must be submitted to the court for approval. This goes on until you recover or die. Conservatorship does not replace the probate process. When you die, your estate has to be probated and your loved ones would have to go through probate again.

A common misconception is that with a will, the spouse, children, or relatives can handle day-to-day affairs if a person becomes incompetent. This is not true. If a person is still alive, their will cannot take effect.

When Conservatorship was first created, it was intended to protect the individual’s property. There are always those unscrupulous individuals who might try to take advantage or take over a person’s property. It was decided that the court would take control and make the final decision for the benefit of the individual.

Despite their good intentions, the courts are often so busy that they cannot take the time to make sound business decisions, especially when selling assets to pay debts. For example, when the real estate market is deflated, it is not the right time to sell real estate. Maybe some other assets can be sold. The same is true with stock portfolios. There is a right time and a wrong time to sell in order to get full value. These and many other decisions that need to be made for an incapacitated person are best made by a trusted relative or friend.

Let’s take an example of what could happen. Jack is a successful real estate investor who owns several properties in joint tenancy with his wife, Sue. One day riding home on his motorcycle, Jack was broadsided by a car that ran a red light. In this split second everything changed for Jack and Sue. Jack was left incapacitated and in a coma. After one year Jack had not recovered, and his medical expenses were piling up. Sue had to liquidate some of their joint assets by selling a rental property that was in her and Jack’s name.

To her surprise, she found out that since Jack was incapacitated, and could not sign his name, she could not sell the property. Even though Jack had left a will, it could not take effect while he was still alive.

Sue had to apply to the court for conservatorship, an expensive and tedious process like probate. In essence, Sue had a new partner, the court, who would sign for Jack. Everywhere Sue turned, the court needed to approve everything including bills that were paid and money that was spent. Luckily, Jack came out of the coma and their lives eventually returned to normal.

If Jack had prepared a living trust and Durable Power of Attorney instead of a will, Sue could have been named as back-up trustee, and would have legally been able to handle all of Jack’s affairs. She could have written checks, signed his name on grant deeds to liquidate real estate assets, and avoided conservatorship.