If you have created a trust, you named yourself the trustee your trust. You also named a “Successor Trustee” to step in after you are gone to manage your assets for the benefit of your loved ones. The Successor Trustee is vitally important role in your estate plan, and you should choose carefully.
The Key Takeaways:
- A Successor Trustee has a lot of authority and things to do, so you should select yours wisely.
- Your Successor Trustee can be an adult child, relatives, friends, or a professional. Each have certain advantages for your estate plan.
Responsibilities of A Successor Trustee
At Incapacity:
If you are ever incapacitated, your successor trustee will step in and begin controlling your trust assets. Because your trust controls only the property that the trust owns, you have to make sure that your trust does won your property. Your trust will work in conjunction with your Medical Power of Attorney and supersede your General Durable Power of Attorney for trust assets.
After Death:
After you pass, your trustee steps in to wrap up your final affairs, pay your bills, inventory your assets, file taxes, and follow your instructions to take care of your beneficiaries. Just like during incapacity, your trust control only the property the trust owns, so completely funding your trust is essential.
What You Need to Know:
Your successor trustee can do everything that you would normally be able to do while alive. The only restriction is your trustee must follow what the trust says and does not breach the trustee’s legal duties to the beneficiaries.
It is okay if your successor trustee does not always know what to do. Your trustee has resources, such as your estate planning attorney, accountant, and other financial professionals who can give advice and help them know what to do and how to do it.
Who Can Be Your Successor Trustee
The basic requirement for a successor trustee is trustworthiness. You can name an adult child, friend, financial professional, or even a bank to serve as trustee. Each have their strengths and weaknesses. For example, a bank trust department will probably have a higher level of professionalism and qualifications, but will probably have higher administration fees when compared with an adult child or friend. This decision is important, and your estate planning attorney will be able to guide you through that decision.
If you do name a friend or adult child, you should name one or more alternates, in case your first choice is unable or unwilling to serve.
What You Need to Know:
When you are selecting a successor trustee, keep in mind your assets and your beneficiaries’ life situation. Your situation may be easily handled by a child or friend, or it may be complex and contentious enough that you may decide that a professional trustee makes the most sense.
You need to plan for your life situation. For example, you may decide that you want your trust to hold your assets and spread out distributions over years, your successor trustee will have greater responsibilities for longer. However, your beneficiaries’ life situations may require this.
Take into consideration your candidates’ abilities, skills, experience, and personality. Being a trustee is a heavy responsibility and a significant requirement of time. Make sure your successor trustee can handle it.
Talk with your candidates and make sure they are even willing to serve.
Your successor trustee should be paid for administering your trust, so make sure your trust allows them to be paid.