One thing that is often overlooked is the fact that a Successor Trustee will have to operate during difficult moments, such as when the Grantor becomes medically incapacitated or after the Grantor passes away. This is why many people ultimately settle on a professional trustee or New Haven trust attorney to serve as Successor Trustee.
Full Answer
First, you need to have an idea of what the successor trustee will be called upon to do. Remember that you'll manage your living trust assets until you're unable to do so. When you can't, the successor trustee steps up to manage and eventually distribute the assets.
So the trustee's job is simply to identify, gather, and safeguard the trust assets, and then distribute them to the people who inherit them, as the trust document directs. The trustee may also need to work with the executor of your estate to pay your final income taxes and handle assets that weren't held in the trust.
The person you choose doesn't need to be a financial expert, but must be able to find good, honest advisers to help with taxes or other matters that come up. A family member who has good judgment—and tact—could be an excellent trustee.
A competent professional trustee can provide investment knowledge and experience, good recordkeeping, and unbiased decision making when it comes to giving money to beneficiaries. A professional trustee can be useful if you have very valuable assets and a trust that's intended to last a long time—for example, to provide for grandchildren.
Choosing the Right Successor Trustee Approach for YouHow well does the individual I want to name as trustee work with others? ... Does the person you plan to name as trustee have sufficient time and flexibility for their duties? ... If co-trustees are named, should they have the authority to act independently?More items...•
A successor trustee is the person or institution that takes control of the trust assets when the original trustee dies, resigns, or becomes incapacitated. A successor trustee's primary objective is to properly administer the trust assets according to the trust's terms and in keeping with fiduciary standards.
- Notify all banks so you can start writing checks as the Successor Trustee. Each bank will require a death certificate, copy of the Certificate of Trust or complete Trust document, and personal identification from the Successor Trustee.
The successor trustee may be the primary beneficiary of the trust. However, the successor trustee can be anyone you trust. For example, the successor trustee can be a close friend, an adult child, your spouse, your lawyer, an accountant, or a corporate trustee.
Generally, a successor trustee cannot change or amend a trust. Most trusts are initially managed by their creator or original trustee, while they are still alive and competent. But after their passing, a successor trustee must step in to take legal title to assets and administer the trust according to its terms.
Generally speaking, a trustee cannot withhold money from a beneficiary unless they are acting in accordance with the trust. If the trust does not indicate any conditions for dispersing funds, the trustee cannot make them up or follow their own desires.
A trustee cannot lie about anything related to the trust. A trustee cannot provide false information to the beneficiaries or the court. For example, when a beneficiary asks about something relating to the trust, the trustee must answer truthfully.
How can a beneficiary claim money from a bare/absolute trust? If a beneficiary of a bare trust is over the age of 18 years then they can simply ask the trustees to pay the money out to them that they are entitled to. As long as there is no other criteria to satisfy, the trustees should not refuse.
More importantly, there is no government agency that oversees Trustees on your behalf or forces Trustees to act appropriately. Instead, each individual Trustee is expected to act according to the Trust document and California Trust law, even though few private Trustees even know the true extent of their duties.
In theory, having two trustees reduces the burden on each, since the work is shared. Co-trustees may have complementary skills—for example, one may have excellent organizational and administrative capabilities, while another is expert in managing and growing assets.
A trustee, who can either be the trustor or another responsible party, may be appointed while the trustor is still alive; a successor trustee is charged with administering a trust after the trustor or the appointed trustee (if they are different from the trustor) becomes incapacitated or dies.
An executor operates under the supervision of the probate court. A successor trustee is answerable to the beneficiaries of the trust.
Trusts can be broadly divided into one of two categories – testamentary or living (inter vivos) trusts. Testamentary trusts are typically activated by a provision in the Settlor’s Last Will and Testament and, therefore, do not become active during the lifetime of the Settlor. Conversely, a living trust, activates during the Settlor’s lifetime.
One of the most important decisions a Settlor makes when crating a trust is who to appoint as the Trustee of the trust. The overall job of a Trustee is to protect and manage trust assets and to administer the trust using the trust terms created by the Settlor. Think of a Trustee as the conductor of a train.
The bottom line is that a trust must have a Trustee. If the original Trustee cannot/will not serve, a new one must be appointed. If you created the trust, you are still alive, and you have the legal authority to simply name a replacement, the problem is solved.
Please download our FREE estate planning checklist. If you have additional questions or concerns about the need to designate a successor Trustee when you create a trust, contact us at the Northern California Center for Estate Planning & Elder Law by calling (916)-437-3500 or by filling out our online contact form.
Remember that you'll manage your living trust assets until you're unable to do so. When you can't, the successor trustee steps up to manage and eventually distribute the assets.
The trustee may also need to work with the executor of your estate to pay your final income taxes and handle assets that weren't held in the trust. And of course, the trustee of your living trust may also be your executor—many people pick the same person for both jobs.
Professional management can come with some drawbacks: 1 Most will manage and invest cash but won't accept other kinds of assets (real estate or valuable items), that must be appraised, insured, and safeguarded. 2 A corporate trustee doesn't know your family; management is impersonal. 3 Because trust company and bank employees come and go, beneficiaries may have to deal with new people frequently. 4 To keep things simple, a trust company may invest trust assets in a set of standard investments that might not be what you would choose. 5 Beneficiaries may not get a prompt decision when they ask for trust funds.
So the trustee's job is simply to identify, gather, and safeguard the trust assets, and then distribute them to the people who inherit them, as the trust document directs. The trustee may also need to work with the executor ...
Commonly, the job takes only a few weeks or months, and the successor trustee may not even accept payment for the work.
A trustee who takes over the reins of the trust before your death must manage and invest trust assets, and spend trust money on your behalf. Trustees must be scrupulously honest and keep trust assets separate from their own. They must also follow state law, which may require investing trust assets in a diversified way.
The trustee could use trust funds to pay for necessary professional help, but the job can be a lot of work. If, however, the trustee takes compensation from the trust assets, other family members could complain.
In the case of incapacity, the successor trustee typically manages the trust assets, but you can set forth their exact responsibilities and duties in the trust agreement. This may include: Identifying and protecting your trust assets. Investing your trust assets. Paying the trust administration expenses and fees.
What is a successor trustee? A successor trustee is a person who takes over administration of a trust if the original trustee is no longer able to do so. Although trusts of all types usually name a successor trustee, this is especially important for anyone whose estate plans include a revocable living trust.
The successor trustee administers the trust once the grantor is either incapacitated or deceased. In the case of incapacity, the successor trustee typically manages the trust assets, but you can set forth their exact responsibilities and duties in the trust agreement. This may include: 1 Identifying and protecting your trust assets 2 Investing your trust assets 3 Paying the trust administration expenses and fees 4 Filing all required tax returns for the trust 5 Determining your income tax or estate tax liabilities 6 Deciding how and at what time to raise cash from your trust assets to pay ongoing expenses, taxes and debts
When the successor trustee and power of attorney are the same person, then she will need to bring the correct document as proof — either the trust agreement if the asset is titled in the name of the trust, or the power of attorney when it is titled in the person’s name. Without that documentation, it could cause added delays or avoidable ...
Investing your trust assets. Paying the trust administration expenses and fees. Filing all required tax returns for the trust. Determining your income tax or estate tax liabilities. Deciding how and at what time to raise cash from your trust assets to pay ongoing expenses, taxes and debts.
A power of attorney is a legal document that authorizes someone to act on another person’s behalf. A general power of attorney typically gives the authority to make financial and other decisions for that person, and it ends when the person becomes incapacitated or passes away. When planning for a scenario like incapacity, ...
Misunderstanding of power of attorney authority. Similarly, the power of attorney may misunderstand and overreach on his authority when these roles are taken by two different people. By trying to manage assets that are actually held in the trust and therefore under the successor trustee’s control, the power of attorney can unintentionally ...