Choosing the right successor trustee is critical. Clients often believe that a family member or friend who works in finance or the law is the perfect option, but they fail to take into consideration the interpersonal dynamics that are often the biggest part of a successor trustee’s job. Managing beneficiary expectations with administrative duties is not always an easy task. Clients may also seek to use the trust as a way to force “togetherness” by naming all of their children as co-trustees. This is often a recipe for disaster as childhood dynamics are often triggered at the loss of a parent. Honestly evaluating the interpersonal dynamics among the successor trustee, the beneficiaries, and the guardians of minor children is a critical component of an estate planning attorney’s work. Estate planning is not having a client fill out some forms and then sign some documents. It takes hours of conversation to understand who the clients truly love, trust, and can count on to respect their wishes and serve with grace if called upon to do so.
he De Fonte Law PC Successor Trustee Manual contains checklists and guidelines for the successor trustee of a revocable trust, including a surviving spouse. It can be used with any trust and is not specific to trusts drafted by De Fonte Law PC. This manual explains the duties and power of a successor trustee and provides handy checklists and tips for a successful trust administration. There is also a chapter entitled Tips on Working Successfully With An Attorney and Other Professional Advisors.
This manual will be provided to all new clients beginning in September 2020. Prior clients can purchase the manual for $200 and for non-clients the cost is $365.
Who Should Be Your Successor Trustee?
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. Your 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 trust for you – making financial decisions involving trust assets, even selling or refinancing assets, and other tasks related to your trust’s assets. Since your trustee can only manage assets that the trust owns, it’s vitally important that you fully fund your trust. Your successor may also be involved in paying bills and helping to ensure you get the care you need.
After Death: After you die, your successor acts similar 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 that are 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 along.
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.
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, 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 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 a 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.
Rest assured, I can help you select, educate, and advise your successor trustees. You are not alone. If you have any questions or concerns, please feel free to contact me.Published in