Selecting Your Successor Trustee
Your successor trustee plays an essential role in the effective execution of your estate plan. If you have a revocable living trust, you probably named yourself as a trustee, so you can continue to manage your financial affairs. Still, eventually, someone will need to step in for you when you can no longer act due to incapacity or after your death, says Corona Estate Planning Attorney Joseph Hudack.
The Key Takeaways:
- Because successor trustees have many responsibilities, they should be chosen carefully.
- Successor trustees can be your adult children, relatives, trusted friends, or corporate or professional trustees.
Responsibilities of A Successor Trustee
At Incapacity: If you become incapacitated, your successor will take complete control of your trust for you – making financial decisions involving trust assets, even selling or refinancing assets, and other tasks related to your trust’s assets. Your successor may also be involved in paying bills and helping to ensure you get the care you need. Since your trustee can only manage assets that the trust owns, it’s vitally important that you fully fund your trust.
After Death: After you die, your successor acts similarly to an executor of an estate. The successor 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. Like incapacity, the successor trustee is limited to managing assets owned by the trust, so fully funding your trust is vitally important.
Your successor trustee typically acts 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.
An Important Consideration
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.
The successor trustee doesn’t need to know exactly what to do and when because your attorney, CPA, and other advisors can help guide him or her, but you must name someone who is responsible and conscientious.
Who Can Be Successor Trustees
Successor trustees can be your adult children, other relatives, a trusted friend, 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 or unwilling to act.
What You Need to Know:
Your successor trustee should be someone you know and trust, someone whose judgment you respect and who will also respect your wishes.
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 more extended period than if your assets were distributed all at once.
- Taking over as trustee for someone can take a substantial amount of time and requires a certain amount of business sense. Consider the qualifications of your candidates, including personalities, financial or business experience, and time available due to their own family or career demands.
- Be sure to ask the people you are considering if they 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 fair and reasonable compensation.
Get in Touch With an Estate Planning Attorney Today
You are not alone. Rest assured, and we can help you select, educate, and advise your successor trustees. If you have any questions or concerns, please feel free to schedule an appointment with us. Contact Hudack Law today at (877) 314-4309 Toll-free, please visit areas of service (open link in a new tab) or hudacklaw.com (open link in a new tab).