How Do You Choose The Right Successor Trustee?September 21, 2021 By The Sterling Law Group
Choosing the right trustee is essential to any estate plan that includes a living trust. You should carefully consider your options with the help of a trusts attorney as part of the planning process.
When most people set up their first living trust, the initial successor trustee is the trustor’s spouse. As a device to avoid probate and speed up the post-mortem transfer of assets, a living trust with your spouse as the initial successor trustee creates the obvious solution. However, sometimes your spouse will not be available to serve as the trustee after your death, and you will want to think carefully about a different successor trustee. A trusts attorney can assist in this selection.
When Does a Successor Trustee Step In?
The successor trustee – whether your spouse or another named individual – manages your assets when you can no longer do so. This person will also eventually distribute the assets of the trust per your instructions when the time comes. Generally, the successor trustee will step in under two conditions: after your death or after you become unable to continue to manage your assets yourself.
You Become Incapacitated
You may no longer be able to manage your own assets because of an accident or illness. In that event, your successor trustee will take over the management of your trust assets and will disburse those assets as needed for you. Depending on your condition, the successor trustee’s responsibilities could continue for many years. These responsibilities would include tax filings and any other legal obligations required for the trust or the assets. The trustee can use trust assets to retain professional help for these jobs, but it is a great deal of work and responsibility and generally performed for no compensation for the trustee.
After Your Death
If you have created a simple living trust to avoid probate, the successor trustee will have the task of gathering and distributing trust assets per your instructions. If you have a separate executor for your estate, the successor trustee will need to cooperate with the executor to ensure all final obligations such as taxes get handled. Often, of course, the executor and successor trustee are the same individual.
Who Should You Choose?
As we said before, a spouse or an adult child is often the first candidate to be your successor trustee. This choice is usually a viable option for a simple living trust where the assets will be immediately distributed per the documents. Neither a spouse nor a child successor needs to be a financial professional. Still, they do need to be sufficiently sophisticated to understand what you have and how to distribute it. Consider any family member you think will have the judgment, patience, and tact to handle the tasks. Living in the same state is not required, but the job is often easier if the trustee lives closer to your family and assets.
On the other hand, if your estate and assets are more complicated or the trust is designed to continue, as in the case of minor children, you may want to consider someone more capable of handling those tasks. You may have a friend or relative whom you trust who is a financial professional. But, in the likely case that you don’t have Warren Buffet in your family, you may want to consider using a corporate trustee or another professional manager.
Professional management can be expensive, usually a recurring percentage of the assets under management. Further, usually, a minimum account size of at least $500,000 may be required. It would be best if you were also sure that the manager selected can deal with all of the types of assets in your trust; not all do.
Consult with a Trusts and Estates Attorney
Think carefully, consult with people you trust, and then make your decision. In the end, choosing who will handle your trust assets when you can no longer do so is an important decision that can be life-altering for your spouse and children. Always discuss the matter with The Sterling Law Group by contacting our legal team today.