McNickle & Bonner
Who Should Be Your Trustee?
Revocable trusts are great estate planning tools used to minimize estate taxes and avoid probate, among other benefits.
When setting one up, you can appoint yourself as the trustee so you can keep managing your assets and properties. You also have to name a successor trustee who'll take over when you become incapacitated or pass away.
Clearly, choosing the right trustee can be the difference between the seamless, efficient implementation of your estate plan or one fraught with bitter challenges.
What does a successor trustee do?
If you become incapacitated, the successor trustee will assume your role in managing the assets in the trust by:
Making financial decisions
Invest your assets and keep tabs on investments
Selling or refinancing your property
After you pass away, the successor trustee takes over the management of your trust by:
Locating and taking an inventory of your assets.
Determining the value of assets in the trust
Paying final bills
Identifying creditors and paying off debt
Determining, preparing and filing income and estate tax returns
Managing and distributing the accounts and properties in the trusts to beneficiaries
A trustee is not subject to court jurisdiction. Hence, managing and distributing beneficiaries' assets can go on without probate, ensuring your trust can be handled with utmost efficiency and privacy.
It's important to note that trustees are only responsible for and can only manage the accounts and assets placed in the trusts. It's crucial to transfer assets and accounts before you can no longer do so.
Who can I choose as a successor trustee?
Anyone can be a trustee as long as they are 18 and above. That person could be any of your child, spouse, a friend you trust, or a family member.
You don't need to choose an individual as a trustee; a trust company or your bank's trust department can also act as your trustee. When choosing individuals, ensure to have back-ups if your preferred trustee rejects the role or is unfit to act.
Things to consider when choosing a trustee
Choose someone with business and financial skills, training, or experience. Your trustee should also be ready to invest a substantial amount of time.
A successor trustee must be financially responsible as the role involves making financial and investment decisions on behalf of beneficiaries.
Pick someone that'll be around when you need them. So be sure to ask those you're considering if they'll want to take on the burden of being a trustee.
The person you choose as the successor trustee should have good communication skills and has or can develop a good relationship with the beneficiaries.
Pay your trustee. A financial incentive will motivate the trustee to devote time, effort, and energy to the task.
Choosing a successor trustee
A successor trustee has similar control and carries on the duty of managing your trusts according to the terms of the trust agreement after you become incapacitated or pass.
Due to the enormous responsibility, the trustee you appoint has to be competent, trustworthy, and have great attention to detail.
It's not a criterion for trustees to be financial and legal experts that know exactly what to do.
However, they should be willing to take on the responsibilities and ready to seek help from professionals such as accountants and attorneys when needed.
If you have further questions or need an experienced estate planning attorney to select and provide your successor trustee with professional guidance and advice, don't hesitate to reach out to us.