Building An Estate Plan That Is Right For You

What is a successor trustee, and does your trust need one?

People in many different personal situations may decide to create and fund a trust as part of a broader estate planning strategy. Some people create trusts to reduce posthumous tax risks or creditor claims after they die. Others utilize trusts to protect their beneficiaries from personal devices or to leave a very specific legacy when they die.

Especially if someone creates a living trust, they might be the first person to serve as the administrator or trustee of that trust. This arrangement allows them to maintain control over the assets used to fund the trust. However, those creating a trust usually want it to protect their resources after their death in addition to during their lifetime. Therefore, they may need to choose a successor trustee to take over the role they currently hold when they die.

What is a successor trustee?

A successor trustee is somebody specifically chosen by the grantor creating a trust to manage the trust and its resources after their death or incapacitation. A successor trustee has an obligation to act in the best interests of the beneficiaries of the trust and often receives a small amount of compensation for their services. Anyone who creates a trust that they want to persist after their passing might benefit from appointing a successor trustee to take over the management of trust resources.

Who should be the successor trustee?

Deciding who should take over trust administration is a major undertaking. The actions of a trustee can either increase or substantially reduce the value of the assets in the trust. Their actions could also affect the quality of life that beneficiaries have and their opinion of the grantor.

Choosing someone who is responsible, reliable and ethical is important. Someone’s age, health and proximity are also important considerations when choosing a successor trustee. In some cases, people may find that rather than naming a family member, they may benefit from hiring a professional fiduciary. A professional fiduciary is not a family member but often instead a legal professional who agrees to take over the complex responsibility of trust administration.

Contemplating the need for a successor trustee may benefit those intending to pass their most valuable resources to others via a trust after their passing.