Revocable living trusts should have a successor trustee named.
Estate planning allows you to prepare for incapacity and death.
Common documents include powers of attorney, advanced healthcare directives, last will and testaments, and trusts.
While a last will and testament is only effective after a person has died, revocable trusts are helpful for the management of trust assets while a person is alive and for the distribution of these assets after a person has died.
According to a Smart Asset article titled “Successor Trustee: Duties, Powers and More,” naming a successor trustee is a key element of trust planning.
Without a successor trustee, trust administration could be delayed.
Revocable living trusts allow for the individual who creates the trust to also serve as the trustee.
As a result, you have continual and full authority over the trust while you are alive and have the mental acuity to do so.
You can change the terms, move assets into or out of the trust, and even terminate the trust at any time.
Because you have the authority to continue making changes, it is referred to as a “revocable” trust.
When you become incapacitated or die, the terms of the trust become fixed, and someone else must enforce them and manage or distribute assets according to your wishes.
This individual is known as the successor trustee.
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If you fail to name a successor trustee, upon your incapacity or death no one will have the legal authority to manage your trust-titled assets.
By naming a successor trustee in your trust documents, this individual will be able to immediately step in to manage and execute the trust without avoidable (and expensive) delays.
The successor trustee has no authority or duties to fulfill until the primary trustee can no longer serve in his or her role.
Typically, this occurs when the primary trustee has become incapacitated or died.
The responsibilities of the successor trustee only apply to the assets titled to the trust.
Managing Trust Assets.
Successor trustees handle investing and managing of trust assets according to the terms of the trust and for the benefit of the beneficiaries.
Appraising and Distributing Assets.
After the death of the primary trustee, the successor trustee must value all trust assets to pay taxes and debts and distribute any remaining assets to the trust beneficiaries according to its terms.
Handling Administrative Tasks.
The trustee must delegate funds to cover trust administration expenses and must collect insurance policy payouts if the trust was named as the beneficiary of the policy.
The main differences between executors and successor trustees are probate and scope of authority.
An executor is named in a last will and testament and is responsible for the administration of the estate through the probate process after you have died.
The executor must locate and collect assets, pay debts and taxes from your state, and distribute these assets according to the terms of your last will and testament.
After the probate process has been completed, the work of the executor is complete.
A successor trustee has authority over trust assets.
Because of the nature of trusts, management and distribution are not subject to the approval of the courts in most states.
The duties of a successor trustee may last much longer than those of an executor, especially if the trust requires assets to be distributed over time.
Successor trustees can also be named for irrevocable trusts.
The distinction between successor trustees for irrevocable trusts and revocable trusts is that successor trustees for irrevocable trusts will not customarily take over duties after something happens to the trust's creator.
Why?
The creator of an irrevocable trust customarily does not serve as the trustee.
Accordingly, another party is oftentimes named as the primary trustee in the trust documents.
If something were to happen to the original trustee, the successor trustee must then assume responsibility for the trust.
The duties and authorities of successor trustees are the same whether they serve under the terms of a revocable or irrevocable trust.
Careful consideration should be given to any decision regarding your estate planning.
The person who serves as successor trustee should be competent, trustworthy, and preferably younger than the original trustee.
Because this role can be demanding, your successor must be both willing and capable.
By appointing a successor trustee, you can avoid delays in your revocable trust going into effect.
Discussing your options with an experienced estate planning attorney can help you make the best decision for your comprehensive estate plan.
Appointing successor trustees reduces delays in your trust management and distributions after you die while simultaneously keeping these assets out of probate.
Utilizing a trust allows you to have more control and flexibility over the terms of asset distribution.
Having a successor trustee allows for a seamless transition, so trust assets can be invested and managed according to your wishes.
Ultimately, naming a successor trustee to your revocable living trust simplifies the administration process.
This post is for informational purposes only and does not provide legal advice. You should contact an attorney for advice concerning any particular issue or problem. Nothing herein creates an attorney-client relationship between Harvest Law KC and the reader.
Reference: SmartAsset (May 30, 2023) “Successor Trustee: Duties, Powers and More”
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