The basic qualities of a good successor trustee are integrity, good judgment and objectivity.
When you create a Revocable Living Trust, you should choose someone trustworthy to assume the role of a “successor trustee,” the person who will manage your trust and its assets after you pass away or become incapacitated. Making this decision is not as simple as picking a favorite aunt or an eldest child. Here are some tips on choosing the right person.
WHAT IS THE ROLE OF A SUCCESSOR TRUSTEE?
Your successor trustee manages your trust’s assets in the best interests of the beneficiaries (including you, in the event you become incapacitated) and decides how assets are invested or spent, within the parameters that are set forth in your trust.
Typically, this role is often assigned to a spouse or other relative, close friend, trusted business associate, professional advisor or corporate fiduciary. You have the option of selecting a primary trustee and an alternate, or choosing co-trustees who act together in managing your trust.
You should determine in conversations with the person you choose and from personal experience that your successor trustee is responsible and will carry out your wishes, exercise sound judgment, make good decisions and, when necessary, seek professional advice on managing your trust and its assets.
KEEPING IT IN THE FAMILY
A relative can be a fine choice as successor trustee if he or she:
• can be objective with beneficiaries
• is comfortable with managing your assets
• is willing and able to carry out the fiduciary requirements of the trust.
Some revocable living trusts are complex or may be designed to benefit heirs for many years to come. If you anticipate that your trust will endure for many years, it might be to everyone’s benefit for you to choose a trust company or bank to serve as your successor trustee. Those institutions are equipped to provide long-term administration, and they generally offer high levels of accountability and oversight. In addition, corporate fiduciaries:
• are competent to handle finances and will follow the trust’s instructions;
• have the time and interest to take on the role;
• will avoid family conflict by being unbiased and unemotional when making decisions.
•don’t die or become incapacitated;
•act objectively in following your instructions contained in the trust; and
•keep detailed records and have estate administration, tax, and investment expertise.
Sometimes a professional who is familiar with your estate plan is a good choice, as long as there is no conflict of interest. That professional could be your financial advisor or tax professional or a combination. Regardless of whom you choose, the basic qualities of a good successor trustee remain the same: integrity, good judgment and objectivity.
For more estate planning information in Southern California, please contact the Law Office of Newell & Havens at 626-335-6884