The Role of a Successor Trustee After the Trust Creator 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. This person would also be called upon to serve should you become mentally incapacitated.
The person making a revocable trust acts as the trustee of their accounts. This is in contrast to an irrevocable trust, where someone else must be appointed to this position. A successor trustee waits in the wings to take over when you can no longer manage the trust yourself.
Trust Formation Documents
Your successor trustee is responsible for settling your trust or continuing to manage it for you after your death. The exact duties would depend on the terms you set for your trust in its formation documents. These documents are called the trust agreement.
As an example, you could direct that all assets and property held in the trust be transferred to beneficiaries when you die. You may further state that the trust should then be closed. Your successor trustee is obligated to follow these and any other directives you establish.
In some cases, you might want your trust to remain up and running after your death. This is often done in cases where 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. They would oversee these distributions and manage the assets held in your trust to ensure that they continue to generate sufficient income.
Naming a Successor
When you choose someone as a successor you should make sure they are capable of carrying out these duties. 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 name an institution like a bank—for the job. It is best to work with an estate planning attorney.
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.
The successor has several responsibilities they must carry out after the death of the creator of the trust. 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 are one way that you may avoid probate. Probate is a lengthy and costly court proceeding that determines the deposition of your assets after your death. However, you might have to create 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. Each state has specific rules for probate, so, an estate attorney can help you in this regard.
Consumer Financial Protection Bureau. "What Is a Revocable Living Trust?" Accessed June 24, 2020.
Klenk Law. "Irrevocable Trusts: Everything You Need to Know." Accessed June 24, 2020.
Fiduciary Trust International. "The Benefits and Shortcomings of Revocable Trusts." Accessed June 24, 2020.
Fidelity Investments. "Your Children." Accessed June 24, 2020.
Superior Court of California, County of Santa Clara. "5. What Does a Trustee Need to Do When the Settlor Dies?" Accessed June 24, 2020.
American Bar Association. "The Probate Process." Accessed June 24, 2020.
Superior Court of California, County of Alameda. "Living Trusts - If I Have a Living Trust, Do I Still Need a Will?" Accessed June 24, 2020.