As Houstonians live longer, wealth planning for loss of mental capacity surges

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Susan Travis, senior vice president and relationship manager at Houston-based Kanaly Trust, said implementation of revocable living trusts is on the rise.

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Suzanne Edwards

Reporter- Houston Business Journal

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Wealthy Houstonians are living longer — no doubt a combination of advances in medicine and the means to pay for top-tier healthcare. The only catch is they can't guarantee they'll be lucid enough to manage their own finances near the end of their lives.

To safeguard against the potentially tedious and painful process of having to suddenly offload the stewardship of one's wealth to an un-suspecting guardian, the wealthy are increasingly establishing what's known as revocable living trusts, said Susan Travis, senior vice president and relationship manager at Houston-based Kanaly Trust, a wealth management and estate planning firm.

"As people get incapacitated, whether it be dementia or aging, we can act on their behalf. Also a lot of people travel, so if (their wealth) is in that trust and if something goes wrong, we can steward that," said Travis.

Travis outlines three major reasons why clients are favoring revocable living trusts:

1. Privacy— When a client dies, the court-supervised probate process launches to take stock of the deceased's assets and distribute them to creditors and inheritors. If the client puts their assets into a revocable living trust however, that is counted as one asset in the probate process.
   "There's a need to protect the living spouse," said Travis, and maintaining privacy over the structure of one's wealth is one way to do that.
2. Mental acuity problems are becoming more of a reality— In 2013, an estimated 5.2 million Americans had Alzheimer's disease according to a report for the National Center for Biotechnology Information, and by 2050, the total estimated prevalence is expected to be 13.8 million.
   "Clients want a vehicle in place, whether it be a spouse or a corporate co-trustee, that can act on their behalf," said Travis.
3. Out-of-state property— As wealthy Houstonians buy property in other states, they can avoid different states launching parallel probate processes after death by including those properties in their revocable living trust.

At the end of the day, Travis said it's a matter of comfort for the next generation to know that financial affairs are handled and they can focus on what really matters at the end of a parent's life.

Suzanne Edwards covers money and law for the Houston Business Journal.