In a trust-based estate plan, you appoint successor trustees. The trustee is involved in just about every aspect of the trust administration, from taking care of you and your trust if you are incapacitated (“disability trustee”) to administering your trust upon death (“death trustee”). The successor trustee role carries great responsibility.
Most people choose someone close to them. Choosing someone who knows you and your family for this role can be beneficial in many ways, but if that person doesn’t have a financial or legal background, the responsibilities can be overwhelming.
It is important that the person you nominate knows not only what is expected of trustees in general, but what you expect of them. For this reason, it is equally important to let your successor trustees know they have been selected and educate them on the role.
Here are some tips:
• Make sure you understand your trust and the role of successor trustees. I recommend bringing your successor trustees to a Family Meeting at our office, so that we can assist you in explaining the role and expectations. (No financial information or specific bequests will be discussed).
• Only appoint trustworthy, honest successors. There can be no corner-cutting here. Your successor will be dealing with your property and must do so faithfully and honestly.
• Remember that your successor will eventually become the trustee for other beneficiaries. Your death trustee will assume responsibility over your trust on behalf of the beneficiaries. This means administering your trust after your death, accounting for your assets, debts and taxes, and following your trust’s instructions for distributing to beneficiaries. In many cases, the death trustee will have ongoing responsibilities if you are creating trust shares for beneficiaries because accounting and notice requirements may continue for a long time.
• Educate your successor trustees about your financial situation, where you keep important documents, and who your advisors are, among other important factors. Your successors will need this information immediately upon taking office and won’t have time for a scavenger hunt.
• Be sure you have a support team that will benefit the trust and the beneficiaries. Get investment advice from a financial professional, have a trusted attorney for any legal questions you might have, or hire a mediator if there are irreconcilable differences among beneficiaries.
The goal is to follow all the guidelines of the trust, follow all rules of the trust code and to protect and preserve trust assets for your beneficiaries.
Authored by Tomi L. Farr