I recently met with a client during the process of setting up her estate
plan. When I asked her who she would like to nominate as her Successor
Trustee, she looked at me with a puzzled look on her face. After I explained
the purpose of the nomination, she said, "I don't know who it
should be. In fact, among my circle of family and friends, I don't
think I trust anyone to fulfill my wishes."
While my client's response was troubling and sad on one level, it was
also enlightening for me as a practitioner on another level. The Successor
Trustee plays an important role in the effective execution of any estate
plan and should be chosen carefully.
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.
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.
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. Above all, your successor
trustee(s) should be people you trust, people whose judgment you respect,
and those people you are confident will carry out 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.
- Keep your successor trustees informed of any changes to the trust terms
and provisions. Provide them a copy of your trust document.
- Trustees should be paid for their work; your trust document should provide
for fair and reasonable compensation.
If you have further questions about your specific situation, then please
don't hesitate to
contact me. I am 100% dedicated to meeting your needs and will use my experience
as a San Jose estate planning lawyer to help you figure out a good solution.