Successor Trustee Definition

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“Using a trust can help you manage your estate’s assets in many ways. Trusts are more flexible than wills when it comes to distributing assets. What is a Successor Trustee Definition? Successor trustees manage trusts – essentially the “executor” of your trust when you die.”

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Successor Trustee Definition

In the same way, a trust manages trust assets after your death; a will does the same. In contrast, a trustee manages your trust until your beneficiaries receive their assets instead of shepherding your estate through probate. For specific estate planning concerns, you can speak with a financial advisor.

 

Who Is a Successor Trustee?

You will appoint a successor trustee when you set up a revocable living trust. As long as you are alive, you’ll serve as both the settlor and the trustee. This is why it’s referred to as a revocable living trust, as it gives you the power to move assets in and out of the trust. You can change the terms and beneficiaries and revoke them if you wish.

After you die, your successor trustee will take over the trust and assume all the trust’s responsibilities. During this time, the successor trustee invests the trust’s assets until it is time to transfer them to the beneficiaries. As soon as the successor trustee has reached that time, they will handle the transfer.

You will avoid dealing with probate court when choosing a living trust over a testamentary one. The court won’t need to permit your successor trustee to manage your trust. Your successor trustee won’t need to submit regular reports.

 

What A Successor Trustee Must Do

The following are some of the duties typical of successor trustees:

 

Informing the beneficiaries:

 

As the successor trustee, you must inform all heirs and beneficiaries of the trust agreement.

 

Valuing assets:

Beneficiaries must be able to receive their due share of the trust’s assets if the successor trustee assesses the assets accurately.

 

Tax liability identification and settlement:

A successor trustee must identify any tax liabilities associated with the trust. Including filing all necessary forms, such as estate and income tax.

 

Keeping Trust Administration Funds Secure:

Besides ensuring that the trust has enough funds for administration, the successor trustee is also responsible for maintaining trust funds.

 

Gather insurance policies:

The successor trustee receives life insurance policies and social security benefits when the Grantor dies.

 

Make an investment decision:

Aside from maximizing the trust’s value for its beneficiaries, the successor trustee must also determine how we should invest the trust assets.

 

Investment monitoring:

As the successor trustee, it is the responsibility of the successor trustee to oversee the trust’s investments and make necessary changes to protect the trust’s assets and ensure the beneficiaries get what the Grantor planned.

 

Making distributions to beneficiaries:

It is the successor trustee’s responsibility to distribute the Grantor’s assets and funds following the wishes of the Grantor after the Grantor’s death.

 

The Basic Characteristics of The Succeeding Trustee

Potential successor trustees must possess the following traits before choosing them:

 

The Basic Characteristics of The Succeeding Trustee.

 

Trustworthiness:

To ensure that the trust’s assets can be handled with integrity and honesty, successor trustees must execute the terms of the trust faithfully, aiming to benefit the beneficiaries.

 

Knowledge:

A successor trustee should have experience with the following:

  • Investment,
  • Real estate,
  • And tax management about various financial matters.

 

Sound Judgment:

The successor trustee must make responsible decisions regarding the trust assets and maintain neutrality in disputes between beneficiaries.

 

Willingness:

Your willingness to assume the position’s responsibilities and compliance with the trust agreement is essential if you choose to serve as a successor trustee.

 

Availability:

For a successor trustee to make decisions promptly, the successor trustee should be accessible and readily available. This means responding quickly to inquiries themselves enough time to address the trust’s issues.

 

The Best Option to Be Your Trustee Successor

Your successor should be capable of fulfilling these duties, so make sure they are properly qualified. You should choose the correct candidate for this position or an institution, such as one of the banks.

A lawyer assisting you in estate planning can help you choose the right. You should also choose one or more “backups” to ensure your first choice is available to trustees.

 

A Guide to Appointing Your Successor Trustee

The documents you use to set up your trust are called the trust agreement. You must specify the successor trustees and their responsibilities. The trust might operate so that all assets held in it pass to beneficiaries upon your passing, and the trust might then end.

Sometimes it makes sense to keep your trust running after your death. It usually happens when your trust is holding property for the benefit of your children. A trust holds property for minors until they reach the age you specify since they cannot legally own property.

A successor trustee is responsible for disbursing funds to the guardians of the trust to take care of them, according to your directions, and ensuring that the trust’s assets trust continue to earn an income to the beneficiary.

 

Different roles of Initial Trustee, Successor Trustee, and Executor

Successor trustees, initial trustees, and executors have different roles that need clarifying. In revocable living trusts, the Grantor typically assigns themselves as the initial trustee upon trust creation.

The initial trustee makes an investment, distribution, and other trust-related decisions following the trust agreement.

The successor trustee assumes the Grantor’s role if the Grantor or initial trustee dies. Becomes incapacitated, retires, or otherwise ceases to act.

Grantors appoint the initial trustee and successor trustee when they create the trust. At the same time, testators appoint executors when they create a will.

Executors are responsible for managing an estate after the death of a testator, including:

  • Gathering assets,
  • Paying debts,
  • Paying taxes,
  • And spreading assets following the will.

 

The Duties of a Successor Trustee Upon the Death of The Grantor

The Successor Trustee is typically responsible for winding down the trust upon the death of the Grantor. Successor Trustees must also maintain the trust property to prevent waste and loss.

Successor trustees typically need to do the following things:

  • Assume the role of Successor Trustee and notify the Grantor’s family and loved ones of your appointment.
  • The beneficiaries named in the Declaration of Trust should receive copies of the document.
  • Proof of the Successor Trustee’s legal authority to administer the trust property may need copies of the Grantor’s death certificate.
  • Prepare a list of all the properties held in the trust, and take all the steps necessary to ensure their security and protection.
  • Be sure to notify the relevant banks if the Grantor has put bank accounts in trust for you to access.
  • Keep receipts of any expenses paid using trust property. Coordinate with the Executor, if necessary, to pay any outstanding bills or taxes.
  • Obtain the Executor’s permission to add the remaining property not placed in the trust to the trust if the Grantor’s Will is a “Pour-Over Will,” which names the trust as its beneficiary.
  • If the Grantor no longer needs their accounts, close them. Credit cards, phone service, and internet service accounts are usually acceptable to close. If the Grantor retains utility and insurance policies, keep them active to preserve the value of their assets.
  • The Declaration of Trust specifies the beneficiaries of the Grantor’s trust property. Before you move on to general instructions regarding distributing the remaining property. You should complete instructions for distributing specific pieces of property to specific beneficiaries. An estate sale may be necessary to convert the remaining assets into cash.

 

Incapacity for Grantor, but still a living Successor Trustee’s Duties

The Declaration of Trust usually directs the Successor Trustee to use trust assets for the care and comfort of the Grantor. At the same time, the Grantor remains alive, even when the Grantor is incapacitated but still alive. Also, providing for the Grantor’s family and loved ones may be necessary through trust property.

The Successor Trustees should typically act in the following manner when the Grantor has passed away:

  • The Successor Trustee should update the Grantor’s family members and loved ones that you are the Successor Trustee.
  • Take any measures necessary to ensure the trust property is secured and protected.
  • Ensure you have access to any trust accounts held by banks and financial institutions.
  • Assess whether the Grantor is eligible for disability benefits.
  • Assist the Grantor’s Agents with all the Grantor’s business, pay bills and taxes, and ensure the Grantor receives the care they need under the Grantor’s Power of Attorney for Financial or Healthcare.
  • In the course of your duties, keep track of any bills you have paid, as well as expenses you have incurred.

 

Is It Possible for An Irrevocable Trust to Be Revocable and Have a Successor Trustee?

When you create an irrevocable trust, successor trustees have a different meaning. You cannot serve as your trustee while alive on an irrevocable trust. It is necessary to choose a successor trustee.

You can nominate a successor trustee to replace the original if the original passes away or becomes incapacitated.

 

My Role as a Successor Trustee

You do not have to serve if you are nominated. The next Alternate Successor Trustee listed in the Declaration of Trust will be able to serve if you decline to accept this responsibility.

If there is no alternative in the Declaration of Trust, the next Successor Trustee should appear in the Declaration of Trust. Immediately inform the Grantor if you are unwilling to serve as Successor Trustee. (If you are certain you will not serve as Successor Trustee, let the Grantor know as soon as possible.)

You are generally only required to continue in this role for a while, even if you accept your nomination as Successor Trustee. Upon stepping down as Successor Trustee and appointing a successor, the Declaration of Trust will set out the circumstances.

 

FAQS

 

If there is no successor trustee, what does one do?

Without a successor trustee specified in the trust document, the court must choose someone to take over that position.

 

What is the function of the succeeding trustee? Be a trustee for irrevocable trusts?

An irrevocable trust can name a successor trustee who will take on all tasks as any other trustee. Such as managing assets and putting beneficiaries’ interests first.

 

What are the requirements to be a successor trustee?

You may be a successor trustee if you are over 18 and of sound mind. The Grantor may name a bank to serve as a trustee. Other people, such as adult children and close relatives, can also serve as successor trustees.

 

How do successor trustees perform their duties?

Trust assets are to be managed according to the document, distributions are to beneficiaries, debts are to settle, and taxes must be paid. Successor trustees must also act in good faith and respect the trust terms.

 

Who nominates successor trustees?

In a trust, the Grantor can specify in the document which trustees will become the initial trustee and which trustees will become successor trustees. If no successor trustees are named, the court may appoint someone.

 

Bottom Line

An individual named a successor trustee assumes a trustee’s position upon the death or incapacity of the original trustee. There are several duties that a successor trustee must fulfill, including:

  • Notifying beneficiaries,
  • Appraising assets,
  • Settling tax liabilities,
  • Investing assets,
  • And disbursing assets.

An ideal successor trustee will be trustworthy, knowledgeable, able to make sound judgments, willing to accept the role, and available. One successor trustee, many successor trustees, or many trustees serving jointly. The successor trustee can be a family member, personal friend, or organization.

No matter what number of successor trustees a grantor chooses. It remains crucial that those chosen respect and uphold the trust’s provisions. In addition, selecting someone trustworthy and capable of doing the job is crucial.

Choosing someone with the right qualifications is important when making decisions about trusts. As a result, individuals contemplating establishing a trust can engage the services of a financial advisor for assistance.

Hedy Ghavidel

HEDY GHAVIDEL Managing Attorney  Roseville Office  1-866-471-6981  info@attorneysre.com Bio...

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