When clients create Revocable Living Trusts, they must choose someone trustworthy to assume the role of a Successor Trustee — the person who manages a Trust and its assets after your client dies or is incapacitated.
Making this decision is not as simple as picking a favorite aunt or an eldest child. The choice can be difficult. That’s why we’re sharing some basic advice to give to your clients on picking an after-death or disability Trustee.
Role of a Successor Trustee
This person manages the assets in the Trust in the best interests of the beneficiaries (including your client in the event of incapacitation) and makes decisions on how assets are invested or released.
Clients need assurance that whomever they choose is responsible and will carry out their wishes, make sound judgments and seek professional advice on managing the Trust when necessary.
Typically, this role is often assigned by clients to a spouse, relative, close friend, business associate, professional advisor or a corporate fiduciary. Sometimes, co-trustees are chosen from a combination of candidates.
They Can Keep It in the Family
A relative can be a great choice as Successor Trustee if he or she:
1. Is competent to handle finances and will follow the Trust’s instructions;
2. Has time and interest to take on the role;
3. Will avoid family conflict by being unbiased and unemotional when making decisions.
Corporate Fiduciaries as Trustee
Some Revocable Living Trusts are complex or may be designed to benefit heirs for many years to come. Trust companies and banks are regulated by government and can manage assets for decades. Their advantages include:
1. They don’t die or become incapacitated.
2. They act objectively in following the Trust.
3. They keep detailed records and have estate administration, tax and investment expertise.
Considering a Professional Advisor
Sometimes a professional who is familiar with the client’s estate plan is a good choice, providing there is no conflict of interest. This could be a financial advisor, an estate planning attorney, a tax professional, or a combination of these professionals.
Regardless of whom your client chooses, the basic elements of a good Successor Trustee are the same: integrity, good judgment and objectivity.
As always, I hope this article has helped you and your clients. If you have a specific question or concern, please contact our office. We are here to help.
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