Just like in business, having the right people in place makes all the difference. 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. They will have a great deal of responsibility, so it’s essential you choose the right person.

What Are the Responsibilities of A Successor Trustee?

Generally, your successor trustee 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.

At Incapacity

If you become incapacitated, your successor trustee will step in and take full control of your trust for you. They will make all financial decisions involving trust assets (including selling or refinancing assets.) Since your trust can only directly control assets that it owns, it’s vitally important that you fully fund your trust. Your successor trustee may also be involved in paying bills and helping to ensure you get the care you need.

After Death

After you die, your successor trustee acts just like an executor of an estate would. They take an inventory of your assets, pay your final bills, sell assets if necessary, prepare your final tax returns, and distribute 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 will be acting without court supervision, which is why your affairs can be handled privately and efficiently, which is a great benefit of a living trust. But this also means it will be up to your successor trustee to get things started and keep them moving along.

Who Can Be a Successor Trustee?

You can name almost anyone to be your successor trustee. Options include your adult children, other relatives, a trusted friend, or a professional or corporate trustee. If you choose an individual, you should name more than one in case your first choice is unable to act.

The most important thing to keep in mind is that your successor trustee should be someone you know and trust, whose judgment you respect, and who will also respect your wishes.

Other Key Points 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 trustee 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 successor 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, we can help you select, educate, and advise your successor trustees. You are not alone. Contact the McKenzie Law Firm and we can assist you in every aspect of your estate planning.