Who should you pick to be your trustee?

If you’ve decided to create a living trust, you will probably name yourself as the trustee in order to be able to continue managing your own financial affairs. However, at some point in time you’re no longer going to be able to act as trustee due to incapacity or after you’ve died.

Therefore, you’ll need to pick a successor trustee, someone who can step in and manage the trust when you are no longer able to do so. Who should you pick to be your trustee? The role of the successor trustee is to carry out the terms established in the agreement that created your trust. Being a living trust successor carries a lot of responsibility with it, so this isn’t a decision that should be taken lightly.

If you should become incapacitated, your successor trustee will take full control over your finances — paying bills, making financial decisions for you, including selling and refinancing your assets as per the instructions in your trust document and if this does not breach fiduciary duty.

After your death, your successor trustee will take on the role of an executor. He or she takes an inventory of all your trust assets, pays final bills, selling any assets if necessary, disperses assets per instructions in the trust, and has final tax returns prepared.

Things to consider

When choosing your successor trustee, you need to keep in mind the type and amount of assets that are held in the trust and the complexity of your estate. If you are planning to keep some assets in the trust after you die for your beneficiaries, your successor trustee is going to have more responsibilities for an extended period vs if the assets were to be distributed all at once.

Additionally, the person who you choose to be your trustee should be skilled at keeping good records, be a good communicator, and be able to manage your trust assets appropriately. In other words, your successor trustee must take into consideration the purpose of the trust, its terms, distribution requirements, and other circumstances related to your trust and its beneficiaries.

If there are business considerations to be taken into account with respect to your trust, you may want to consider the option of a corporate or professional trustee who can provide investment knowledge and experience, is good at recordkeeping, and can make unbiased decisions when it comes to your beneficiaries.

Getting legal advice

Successor trustees can be your adult children, other family members, close friends, or a corporate trustee from a bank trust department or trust company. When making your choice of a successor trustee, you want to keep in mind the qualities that make a person a good choice — integrity, possessing good judgment, and having the ability to remain objective.

An estate planning attorney can help and advise you on choosing a successor trustee. At the Law Office of David W. Foley, estate planning and living trust attorney in San Diego, we can answer any questions you may have about successor trustees and provide you with the best options for your individual situation.

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