If you have a revocable living trust, you probably named yourself as trustee so you can continue to manage your own financial affairs, but eventually someone will need to step in for you when you are no longer able to act due to incapacity or after your death. The Successor Trustee plays an important role in the effective execution of your estate plan.
The Key Takeaways:
- Because successor trustees have a lot of responsibility, they should be chosen carefully.
- Successor trustees can be your adult children, other relatives, a trusted friend, or a corporate or professional trustee.
Responsibilities of a Successor Trustee
At Incapacity: If you become incapacitated, your successor will step in and take full control of your finances for you—paying bills, making financial decisions, even selling or refinancing assets.
After Death: After you die, your successor acts just like an executor would—takes an inventory of your assets, pays your final bills, sells assets if necessary, has your final tax returns prepared, and distributes your assets according to the instructions in your trust.
Your successor trustee will be acting without court supervision, which is why your affairs can be handled privately and efficiently—and probably one of the reasons you have a living trust in the first place. But this also means it will be up to your successor to get things started and keep them moving along.
What You Need to Know:
Your successor will be able to do anything you could with your trust assets, as long as it does not conflict with the instructions in your trust document and does not breach fiduciary duty.
It isn’t necessary for the successor trustee to know exactly what to do and when, because your attorney, CPA, and other advisors can help guide him or her, but it is important that you name someone who is responsible and conscientious.
Who Can Be Successor Trustees
Successor trustees can be your adult children, other relatives, a trusted friend and/or a professional or corporate trustee (bank trust department or trust company). If you choose an individual, you should name more than one in case your first choice is unable to act.
What You Need to Know:
They should be people you know and trust, people whose judgment you respect and who will also respect your wishes.
Actions to Consider
- When choosing a successor, keep in mind the type and amount of assets in your trust and the complexity of the provisions in your trust document. For example, if you plan to keep assets in your trust after you die for your beneficiaries, your successor would have more responsibilities for a longer period of time than if your assets will be distributed all at once.
- Consider the qualifications of your candidates, including personalities, financial or business experience, and time available due to their own family or career demands. Taking over as trustee for someone can take a substantial amount of time and requires a certain amount of business sense.
- Be sure to ask the people you are considering if they would want this responsibility. Don’t put them on the spot and just assume they want to do this.
- Trustees should be paid for their work; your trust document should provide for fair and reasonable compensation.
Open the following links if you wish to learn more about the roles and responsibilities of your successor trustee and how you may assist them in understanding what their roles and responsibilities will be when they are acting as successor trustee on your behalf.
“I’ve Been Named Trustee – Now What?”
A more in depth explanation of the roles and responsibilities of your successor trustee.
The ABC’s of Successfully Acting as Successor Trustee
Gain even more knowledge by attending one our free seminars with your successor trustee so they are aware of their roles and responsibilities as your successor trustee.
The Barbara M. Pizzolato, P.A. “Successor Trustee Manual”
An easily understood step by step manual to assist your successor trustee in administrating your estate.
