PART 1 – Why is the selection of a Successor Trustee so important and what role will they play with regard to my trust?
Perhaps you either have or are thinking about creating a revocable living trust to hold your assets, avoid probate, pass your assets on to your beneficiaries at death, etc. The successor trustee (i.e. the person who will manage everything when you are unable to because of your death or incapacity) is a very important position. In many ways, this is the most important decision you will make with regard to your estate plan.
Your successor trustee will be responsible for managing your trust assets and distributing assets to your identified beneficiaries. Taxes and bills will also need to be paid and investment decisions made. Thus, there will be a high level of responsibility placed on such person. This process can be complicated. Sometimes, provisions in a trust require the trustee to exercise good judgment and discretion.
Obviously, when you are giving someone this much power, you should choose someone with good common sense whom you trust completely. In most situations, the successor trustee will not need extensive experience in financial management; common sense, dependability and complete honesty are usually sufficient. A successor trustee who may have long-term responsibility over a young beneficiary’s trust property needs more management and financial skills than a successor trustee whose only job is to distribute trust property.
The successor trustee has authority under the terms of the trust document to get necessary professional help — from an accountant, lawyer or tax preparer — and pay for it out of trust assets.
So what are your options? Stay tuned for our next article which addresses the pros and cons of naming your children as a successor trustee.
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