Defining the Role of Successor Trustee

For the dogsMake sure that the person you appoint as successor trustee is willing to serve in that capacity when the time comes.

It’s smart to work with an estate planning attorney to set up a will or a trust. But it’s not so wise to put these documents away with your high school varsity jacket in moth balls. These important legal documents must be reviewed with some regularity.

If you have a revocable living trust, you may have designated yourself as trustee to manage your own financial affairs. However, at some point, someone will need to step in when you’re unable to act because of your own incapacity or death. The successor trustee will be given a lot of responsibility. You may choose an adult child, another relative, a trusted friend, a bank trust department, a trust company or a professional trustee—and it should be someone you know and trust. In addition, this person or corporate entity should be someone with sound judgment who will abide by your wishes. The successor trustee doesn’t need to know all of the particulars now because your estate planning attorney can assist them later.

So how does this work?

In the event that you become incapacitated, your successor will assume control of your finances. He or she will pay the bills and make decisions on financial issues. After you pass away, your successor will act much like an executor under a will—taking inventory of your assets, paying your final bills, selling assets if necessary, having your final tax returns prepared and distributing your assets according to the instructions in your trust. It can be a large amount of work. It may take a year or more to complete the process.

When you think about selecting a successor trustee, consider these factors:

  • The type and amount of assets in your trust;
  • The complexity of your trust documents;
  • The personalities of your potential trustees, their financial or business experience and their availability; and
  • Your potential trustees’ willingness to serve.

Remember that trustees should be compensated for serving, so your trust document should detail fair and reasonable compensation. Follow these steps and increase the odds of everything working out.  To read more about wills and trusts and estate planning visit our website or register for one of our workshops on this topic.

Reference: Ashland Daily Tidings (July 5, 2016) “Aging Happens: Four tips to help select your successor trustee”


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