When creating a revocable living trust, one of the most important decisions you’ll make is choosing a successor trustee. This person (or institution) will step in to manage the trust’s assets if you become incapacitated or after you pass away. But what exactly does a successor trustee do?
What Is a Successor Trustee?
A successor trustee is the person or entity you name in your trust to take over after you, the original trustee, are no longer able to manage the trust. Their job is to ensure that the trust assets are properly managed and distributed according to your wishes. Unlike an executor, who handles a will through probate, a successor trustee can act without court involvement, making the transition smoother and more private.
Key Roles and Responsibilities of a Successor Trustee
1. Managing Trust Assets
The successor trustee is responsible for safeguarding and managing trust assets, including bank accounts, investments, real estate, and personal property. They must act in the best interest of the trust and its beneficiaries.
2. Paying Bills and Debts
If the trust creator (grantor) becomes incapacitated or passes away, the trustee must pay any outstanding bills, debts, and administrative expenses from the trust’s funds.
3. Handling Taxes
The trustee is responsible for filing any necessary tax returns for the trust and ensuring that any estate taxes or final income taxes are paid.
4. Communicating with Beneficiaries
A successor trustee must keep beneficiaries informed about the trust administration process, answer their questions, and provide updates on distributions and expenses.
5. Distributing Assets to Beneficiaries
One of the most important responsibilities of a successor trustee is to distribute assets according to the terms of the trust. This could be an outright distribution or structured payments over time, depending on the trust’s instructions.
6. Keeping Records and Accounting
A trustee must maintain accurate financial records, track transactions, and provide reports to beneficiaries if required. Transparency and good record-keeping help prevent disputes.
Choosing the Right Successor Trustee
Because a successor trustee has significant responsibilities, it’s important to choose someone who is trustworthy, responsible, and capable of handling financial and legal matters. Many people choose a family member or friend, while others opt for a professional trustee, such as a bank or trust company, to ensure impartiality and expertise.
Final Thoughts
Naming a successor trustee ensures that your trust is properly managed when you’re no longer able to do so. If you have questions about selecting a trustee or updating your estate plan, our team is here to help guide you through the process.
