The Role of a Successor Trustee After the Trustmaker Dies
When you set up your revocable living trust, you must name a successor trustee - someone to step in and administer and settle your trust for you after your death. He would also be called upon to serve should you become mentally incapacitated.
Most trustmakers act as trustees of their revocable trusts, unlike with an irrevocable trust where someone else must be appointed. A successor trustee waits in the wings to take over when you can no longer manage the trust yourself.
Duties and Responsibilities of Your Successor Trustee
Your successor trustee is responsible for settling your trust or continuing to manage it for you after your death - exactly which would depend on the terms you set for your trust in its formation documents, called a trust agreement.
If you directed in your trust agreement that all assets and property held in the trust should be transferred to beneficiaries when you die and that the trust should then be closed, your successor trustee is obligated to follow this directive.
In some cases, however, you might want your trust to remain up and running, such as if it's holding a property for the benefit of your minor children. Minors can't legally own property, so your trust would continue to hold it for them until they reach an age you specify.
Your successor trustee would make distributions to their guardian for their care per your instructions. He would oversee these distributions and manage the assets held in your trust to ensure that they continue to generate sufficient income. These responsibilities may be broken down into the following duties:
- Locating and protecting your trust assets
- Collecting life insurance policies, annuities, and retirement accounts on which your revocable living trust has been named the primary beneficiary
- Coordinating with the personal representative or executor of your estate if probate is necessary
- Obtaining the date of death values for your trust assets, including appraisals of real estate and business interests
- Identifying your creditors and paying off these debts
- Determining your income tax or estate tax liabilities
- Preparing and filing all required income tax and estate tax returns
- Paying the ongoing expenses of administering your trust until it is terminated and its remaining property can be distributed to your beneficiaries
- Raising the cash necessary to pay off your debts, the ongoing expenses of administering the trust and income tax and estate tax liabilities
- Investing and managing your trust assets until they can be distributed to your beneficiaries
Revocable living trusts avoid probate, but you might have created a pour-over will to move assets not in the trust into your trust at the time of your death. This process would require probate.
Serving as a successor trustee is a huge responsibility, and it's often a time-consuming burden. You should be able to choose the right person or institution for the job with the help of your estate planning attorney, but it's important to name one or more "backup" trustees as well in case your first choice isn't available to serve. Don't name someone without speaking with him first so you can be sure he's willing to accept the job.