SUCCESSOR TRUSTEE: Definition and All You Need To Know

SUCCESSOR TRUSTEE

The establishment of a trust can help to supplement your estate plan by adding an extra layer of protection to the distribution of your assets. Depending on your specific needs, there are several types of trusts available; but most will require you to appoint successor trustees. The Successor Trustee, like the Executor of a Will, will manage the trust after your death. Continue reading to learn more about the duties of a successor trustee vs. those of a trustee and executor and how they take over their duties.

What is a Successor Trustee?

A Successor Trustee is the person in charge of administering and settling a trust after its creator (known as the Grantor) dies. A successor trustee is also in charge of the trust if the grantor is unable to make decisions. The exact responsibilities of successor trustees will vary depending on the grantor’s instructions.

When establishing a revocable living trust, the definition of “successor trustee” is especially important. In a living trust, the grantor is often the initial trustee until their death; but they will eventually need a successor to take over. Grantors can appoint a close relative, a family friend, or even a financial institution to serve as successor trustees.

A grantor will name their successor trustee in a document called a Declaration of Trust; which will also explain their role. As a result, the role of the successor trustees is a significant and often time-consuming responsibility.

What Are The Responsibilities of Successor Trustees?

A successor trustee’s specific duties depend on the terms of the Declaration of Trust; local law, and whether the Grantor dies or is unable to make decisions but is still living. The following is a general overview of typical successor trustee duties. Please keep in mind, however, that it is usually a good idea to consult; with an estate planning attorney to learn the requirements specific to your case. They can get money back from the trust for any reasonable costs and expenses they incur while doing their job; which usually includes the cost of getting legal help. Unless the Declaration of Trust says otherwise, successor trustees can’t act for their own benefit.

What Is Involved in the Selection of a Successor Trustee?

If you are appointed as a successor trustee; the first step is to meet with the trust’s grantor to discuss your responsibilities. The grantor will also go over the Declaration of Trust with you and tell you where it is stored. At this point, they will tell you what they expect from you and give you a better idea of what your job is. When establishing the trust, the grantor most likely selected alternate successor trustees, who would take over if you declined. While the specific responsibilities will vary, becoming successor trustees is typically a significant time commitment.

Read also: WILLS ATTORNEY: Why Do You Need One

Successor Trustee vs Trustee

A trustee vs. a successor trustee has similar responsibilities but operate on different timetables. As soon as trust is established, a trustee is appointed to oversee any property held by the trust. They become the legal owners of their assets and are required to follow the Declaration of Trust. The grantor is usually the trustee in a revocable living trust. When establishing an irrevocable trust, the grantor must appoint someone else as a trustee.

A successor trustee is almost always named to ensure that the trust continues to be managed after the death of the grantor or the initial trustee. The successor’s responsibilities will be the same as those of the trustee, with the additional task of settling the trust.

A trustee, who can be the trustor or someone else, can be appointed while the trustor is still alive. A successor trustee is in charge of the trust after the trustor vs. the trustee who was appointed by the trustor becomes incapacitated or dies.

Executor vs Successor Trustee

The roles of a successor trustee vs. an executor are somewhat similar, and the two people will frequently collaborate after the grantor’s death. As previously stated, the Successor Trustee manages the trust after the grantor dies. Depending on the trust, this responsibility could last several years as beneficiaries reach the age of majority.

In the case of an executor, the probate court is in charge. A successor trustee is responsible for the trust’s beneficiaries vs. an executor, on the other hand, is in charge of handling someone’s affairs immediately following death. Their role is critical in completing ongoing affairs, such as utility payments, rent, and so on, on time. The executor must also pay any debts and taxes on time and distribute items according to the will. The executor is responsible for reporting each of these responsibilities to the probate court and closing the estate, vs. a successor trustee can work with them during this process, but their responsibilities only relate to the trustee.

Who Should Serve as a Successor Trustee?

Your successor trustee should be someone you can rely on to manage your finances, look after your beneficiaries, and act in accordance with your wishes. During this time, the court will not monitor the process. It can be difficult to imagine entrusting all of this responsibility to one person, but it is critical to ensure that the trust is managed and closed properly. When choosing successor trustees, consider the following options:

  • Adult children or other members of the family
  • Family members and close friends
  • A financial advisor or a tax professional
  • An estate planning lawyer
  • A Trust Corporation

The most important thing to remember when choosing successor trustees is to choose someone who is capable of handling the role. This person will be in charge of navigating complicated legal documents, managing your money, and talking to your beneficiaries.

Read also: WILLS ATTORNEY: Why Do You Need One

How Does a Successor Trustee Take Over?

The successor trustee takes over by appointment in the trust document itself. If and when the trustor is unable to manage the trust themselves, they will specify who they want to take over management of the trust. If no successor trustee is named to take over, or if the one named is unable to serve for any reason, beneficiaries or a court may appoint a successor trustee to do so. It depends on state probate laws and/or what the trust says to do in such a case. 

Successor trustees must be willing to take over their role, which is usually accomplished by signing a consent to serve or an affidavit of appointment. If an existing trustee wishes to change their successor trustee, they must amend the trust. Most courts will not accept impromptu, self-made changes.

How Should I Go About Selecting Successor Trustees?

For a personal trust, most people name a spouse, a child, or another family member as the successor trustee. However, for larger trusts, many trustees choose an institution or other private trustee; such as a private professional fiduciary, to serve as their successor. Co-trustees are sometimes designated by trust makers as family members and estate planning professionals, accountants, or financial professionals. In any case, it’s important to make sure that the person you choose to be your successor trustee has the time, knowledge, and skills to run the trust.

When Is It Permissible for a Successor Trustee to Take Control of a Trust?

Following the death of the original trustor or the preceding trustee, successor trustees can take over immediately. If the original trustor or preceding trustee is still alive but unable to manage their own affairs – for example, due to dementia or Alzheimer’s – the successor trustee may also take over. Most trusts include provisions that outline how and when incapacity can be proven. A doctor or other designated third party is frequently required to certify that the trustor or trustee is no longer capable of managing their own finances.

Can Beneficiaries Stop the Appointment of a Successor Trustee?

Only if the trust gives them the authority to do so, or if they can demonstrate that the successor trustee is unfit for the position. Of course, courts have the authority to remove a successor trustee if they are negligent or misbehaving. However, the successor trustee is usually whoever the trust says it is, and only the current trustee has the authority to change it. Some modern trusts, on the other hand, include an unbiased and objective “trust protector” with the authority to remove and replace a successor trustee.

Who Chooses the Successor Trustee?

Initially, the trust’s creator When one of the co-trustees dies in a shared spousal trust, the surviving spouse usually becomes the sole trustee. Typically, the successor trustee takes over only after both spouses have died or become incapacitated. Depending on the terms of the trust, a co-trustee who becomes a sole trustee may or may not have the authority to change the successor trustee. In multi-generational trusts, successor trustees frequently have the authority to name the next successor. If no successor trustees are named, or if the designated successor is unable to fulfill their duties for any reason, the beneficiaries may have the authority to appoint a replacement. If they lack such authority or are unable to reach an agreement, the courts may be forced to appoint a successor. However, the trust will not be dissolved due to a lack of a trustee.

Do the Assets in a Trust Belong to the Successor Trustee?

When successor trustees accept an appointment, they take title to trust assets in their own name as trustees. This, however, does not imply that they personally own those assets. A trust is a separate legal entity, and the trustee is simply the person in charge of it. Successor trustees must administer the trust in accordance with its terms for the benefit of the trust’s heirs. When there isn’t a trust that says otherwise, the trustees usually don’t have the power to withhold distributions or disinherit people.

Conclusion

The role of Successor Trustee can last for years and often necessitates some financial and legal knowledge. When creating your own trust, consider who will be able to handle this level of responsibility. Keep in mind that you can always hire a professional. If you have recently been appointed as successor trustees, please consider the role carefully, and don’t be afraid to seek advice from an attorney or other professional.

Frequently Asked Questions

Can I take my assets back if I put them in a trust?

As long as the trust is revocable, and the creator is still mentally competent, the creator of a revocable living trust can take assets back or even close down the trust entirely. For irrevocable living trusts, this is not the case.

Can my successor trustee make trust decisions on their own or do they have to follow my wishes?

Our successor is required by law to manage your trust and its assets in accordance with the terms of your trust agreement. They can, however, make investment decisions for you if you are unable to do so.

Should I name co-Trustees?

There are benefits and drawbacks to having co-trustees. On the one hand, it could be a good way to ensure that everyone feels treated fairly. On the other hand, it may cause family strife and difficulties in administering the trust.

Who will want to handle my trust?

Successor Trustees are typically the grantor or spouse, or adult children, but just because they’re family doesn’t mean they want to manage the trust.

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