Who Should Be Your Successor Trustee?

A capable and trustworthy successor trustee can help accomplish your goals and provide continuity of supervision.

Creating a trust necessitates appointing a primary trustee—and should additionally include appointing a successor trustee.

They assumes the role of supervising the trust should the present trustee pass away, become debilitated, or is no longer agreeable to serve as trustee.

Types of trusts and trustees

If you set up a trust in your will, it is referred to as a testamentary trust. The trust doesn’t come into play until your demise, so you can’t be the primary trustee.

Your will is required to appoint the primary trustee, but it should also make provision for one or more successor trustees. Frequently, the executor that manages the probate of the will is appointed as the trustee, but this is ever so often not the case.

Should you create a trust that comes into effect while you are still living, it is referred to as a living trust. There are two kinds: revocable and irrevocable.

A lot of individuals that create a revocable living trust appoint themselves as the primary trustee since the main purpose of this type of trust is for the trust creator to keep complete control over the trust assets.

A successor trustee is appointed to assume supervision of the trust following the trust maker’s demise or debilitation.

Irrevocable living trusts are usually devised to withdraw assets from the creator’s possession so that the creator is qualified for certain benefits, like Medicaid. If you devise an irrevocable living trust, you can’t retain supervision of the trust assets. Therefore, you may not serve as your trustee.

Successor trustee qualifications

Trusts are overseen by state law. Overall, any mentally sound adult can serve as a trustee. A trustee is not required to be an attorney.

Some companies practice exclusively in the business for serving as trustees. These are usually professional trust-managing companies, law offices, or trust sectors of financial institutions. Such institutions tend to be trustworthy administrators, but they usually charge the trust considerable costs. A lot of individuals select a trusted family member or friend for serving as their successor trustee to circumvent those costs.

Many qualities must be considered when choosing a trustee, and these also relate to your successor trustee.

• Dependability. It is crucially important that your successor trustee is somebody you believe has the virtue to execute the conditions and goals of the trust reliably. There are a lot of cases of trustees taking trust assets for their individual personal gain, so choose someone attentively.
• Willingness. Prior to appointing a successor trustee, you should speak to the individual to make sure they are willing to take on the obligations of a trustee. A trustee is entitled to be compensated for their undertakings, though some close relatives or friends might be willing to act as trustee for a minute or no compensation. You need to make sure that the individual you appoint is satisfied with the compensation contract.
• Understanding. Overseeing trust assets involves making financial decisions concerning different kinds of assets. It also leads to filing yearly tax returns for the trust. Optimizely, you want a trustee that is knowledgeable concerning such things like real estate, market investing, and taxes. Obviously, a trustee can always hire proficient advisors, but this will increase the costs of the trust.
• Capability to apply good judgment. This encompasses judgment in assessing the needs and beneficiaries’ best interests, in addition to ideal financial judgment in overseeing the trust assets.
• Availability. You are going to want a trustee that is going to have the time to pay proper attention to oversee the trust. An individual that works eighty + hours a week at their own business, or works full-time and brings up several children, might not be an ideal choice.
• Age and well-being. Since most trusts continue to exist for a long time, you preferably want a successor trustee that is healthy and somewhat young. For covering a situation in which the successor trustee passes away or can no longer serve, you should also think about designating a secondary successor trustee.
• Informality with the beneficiaries. A trustee that has some level of relationship with the beneficiaries might be able to keep clear conflicts with them. However, you want somebody that can resist undue beneficiary demands.

Co-trustees and beneficiaries appointed as trustees

Many individuals appoint two or more people for serving as successor co-trustees. This requires the trust documentation to clarify how decisions are going to be made in the event of disagreement between the trustees.

Occasionally trust beneficiaries are named as successor trustees, but this usually leads to conflict between the beneficiaries. It is typically best to avoid naming co-trustees or beneficiaries.

Naming a successor trustee can help guarantee that your trust is overseen according to your wishes.

Source:

1. Haman, E. A. (2023, April 5). Who should be your successor trustee? LegalZoom. Retrieved April 17, 2023, from https://www.legalzoom.com/articles/who-should-be-your-successor-trustee

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