Understanding the Role of a Successor Trustee in Your Estate Plan
A Successor Trustee is the individual or entity responsible for managing a trust when the original trustee is unable or unwilling to continue doing so themselves. (Note: the original trustee is typically the person who created the trust, known as the Grantor or Settlor.)
Choosing a Successor Trustee is one of the most important parts of creating your personalized estate plan. Your Successor Trustee’s responsibilities will include:
- Paying Debts & Expenses: The Successor Trustee is responsible for paying any outstanding debts and expenses from the trust before distributing the remaining assets to the beneficiaries.
- Managing Trust Assets: The Successor Trustee is responsible for managing the assets held within the trust, which may include investments, real estate, and personal property. This involves maintaining accurate records, handling investments prudently, and preserving the value of the trust’s assets.
- Administering Trust Assets: The Successor Trustee should ensure that the terms of the Trust are followed according to the Grantor’s intentions and wishes. This can involve liquidating assets, transferring property, and ensuring that distributions are made according to the grantor’s wishes. Additionally, your Successor Trustee must keep accurate records, file tax returns for the trust, and provide an annual accounting to the beneficiaries as required by law.
- Legal and Fiduciary Duties: Acting as a fiduciary, the Successor Trustee must always act in the best interests of the beneficiaries and adhere to the terms of the trust. This includes avoiding conflicts of interest, making prudent financial decisions, and seeking professional advice when necessary.
Now that you understand the general responsibilities of a Successor Trustee, it is also important to understand if and when a Successor Trustee will step into their role. Your Successor Trustee will begin to act under the following circumstances:
- Incapacity: If the original trustee becomes mentally or physically incapacitated and is unable to manage the trust, the Successor Trustee will step in to manage the affairs of the trust for the benefit of the initial Grantor.
- Death: Upon the death of the original trustee, the Successor Trustee automatically assumes responsibility for managing the trust and distributing the assets to the beneficiaries.
- Resignation or Removal: If a current acting Trustee voluntarily resigns or is removed for any reason, the Successor Trustee will step in and take over all trustee duties.
So, how and when should you choose your Successor Trustee?
When considering who to nominate for this role, clients should select someone who is competent, trustworthy, and understands the responsibilities of managing a trust. Clients often choose a trusted family member, friend, or even a professional entity (such as a bank or trust company) to serve in this role. Additionally, you can choose one person or multiple people (acting jointly) to serve as your Successor Trustee.
Prior to your initial meeting with Evans & Davis, it’s a good idea to start thinking about who you and/or your partner may want to name in this role. You will nominate a Successor Trustee in the trust document itself. This nomination ensures continuity and a smooth transition of trust management when the time comes.
At Evans & Davis, with over twenty years of experience in estate planning, we understand the importance of selecting the right Successor Trustee. This decision will have long-lasting effects on your estate and your loved ones. We encourage you to consider all your options carefully and consult with our experienced estate planning attorneys to ensure you make the best choice for your unique situation.