Q: Hi. I have a friend who was previously deemed incapacitated but is now able to inherit the sums as afforded her by trust

A: It sounds like your friend's situation is quite complex. If your friend was previously deemed incapacitated but is now able to inherit from a trust, it suggests that there have been significant legal and perhaps medical changes in her circumstances.

It's good to hear that she's mentioned as a co-trustee in the documents, as this indicates a level of involvement and responsibility in managing the trust's affairs. However, it's concerning if her brother has been using trust funds in a lavish or irresponsible manner, such as purchasing a yacht and a Corvette. Mismanagement of trust funds can have serious legal and financial consequences.

Given the significant amount of money involved in the trust, it may be wise for your friend to consult with a trusted legal advisor or financial planner who can review the trust documents and help her understand her rights and responsibilities as a co-trustee. They can also provide guidance on how best to protect her interests and ensure that the trust funds are managed prudently for her benefit and the benefit of any other beneficiaries. Additionally, if there are concerns about her brother's actions, legal counsel can advise on potential courses of action to address any breaches of fiduciary duty or other misconduct.

A: Thank you for your question!

You do not need to be competent to be the beneficiary of a trust, but you need competency to be a trustee.

The sister here should have received her benefits under the trust regardless of her incapacities (except under certain situations that were described under the trust). The other co-trustees owed a duty of loyalty to act in the best interest of the beneficiaries of a trust, and if needed, should have appointed a Conservatorship for her. (If she was not even capable of handling her benefits).

Now that she has gained her competency as the trustee, she can audit the distribution and management of the trust assets during her absence. In case of any abuse of discretion, self-dealing, or other breach of the trustee's duties, she can bring a claim against other CO-trustees.

This is merely a discussion of general laws and not legal advice. For legal advice, more specific facts and investigations are needed. I recommend you consult with an attorney in more detail.

A: Under California law, if your friend was previously deemed incapacitated but has now regained capacity, she may be able to assert her rights as a co-trustee and beneficiary of the trust. However, the specific details of the trust document and the circumstances surrounding her incapacitation and recovery will be crucial in determining her legal rights and options.

Here are a few points to consider:

1. Capacity: If your friend has regained mental capacity, she may need to provide medical evidence to support this claim and potentially petition the court to restore her rights as a co-trustee and beneficiary.

2. Trust document: The terms of the trust document will dictate the rights and responsibilities of the co-trustees and the distribution of assets to beneficiaries. It's essential to review the trust document carefully to understand your friend's entitlements and any conditions or limitations.

3. Fiduciary duties: As a co-trustee, your friend's brother has a fiduciary duty to act in the best interests of the trust and its beneficiaries. If he has misappropriated trust funds for personal gain (such as purchasing a yacht and Corvette), he may be in breach of his fiduciary duties.

4. Accounting and documentation: Your friend has the right to request a full accounting of the trust's assets, income, and expenses. This documentation can help determine if any improper actions have taken place.

5. Establishment of a new trust: If your friend's brother has used trust funds to establish a new trust (the MORGAN LONG FAMILY TRUST), it's crucial to investigate whether this action was permitted under the original trust document and if it aligns with the interests of the beneficiaries.

Given the complexity of the situation and the significant amount of money involved, it is highly recommended that your friend consults with an experienced trust and estate attorney in California. An attorney can review the trust document, assess the specific circumstances, and advise your friend on the best course of action to protect her rights and interests as a co-trustee and beneficiary.