Choosing a trustee is one of the harder decisions when finalizing an estate plan. Remember that things change, and you’ll need to revisit your decision as time goes by.
Having done the work necessary for creating a will is a great first step. But what many people don’t understand is if you have not reviewed your will in the last three years, things may have changed that will undermine your wishes. An estate plan is not a “set it and forget it” document. For example, you may be surprised to learn that the individual or entity that you chose to be a successor trustee may no longer be willing to serve in that capacity when the time comes.
The Ashland Daily Tidings recent article, “Aging Happens: Four tips to help select your successor trustee,” encourages you to review estate planning documents more closely and more frequently.
If you have a revocable living trust, you may have designated yourself as trustee to manage your own financial affairs. However, at some point, someone will need to step in when you’re unable to act because of your own incapacity or death. The successor trustee will be given a lot of responsibility. You may choose an adult child, another relative, a trusted friend, a bank trust department, a trust company or a professional trustee—and it should be someone you know and trust. In addition, this person or corporate entity should be someone with sound judgment who will abide by your wishes. The successor trustee doesn’t need to know all of the particulars now because your estate planning attorney can assist them later.
So how does this work?
In the event that you become incapacitated, your successor will assume control of your finances. He or she will pay the bills and make decisions on financial issues. After you pass away, your successor will act much like an executor under a will—taking inventory of your assets, paying your final bills, selling assets if necessary, having your final tax returns prepared and distributing your assets according to the instructions in your trust. It can be a large amount of work. It may take a year or more to complete the process.
When you think about selecting a successor trustee, consider these factors:
- The type and amount of assets in your trust;
- The complexity of your trust documents;
- The personalities of your potential trustees, their financial or business experience and their availability; and
- Your potential trustees’ willingness to serve.
Bear in mind that just because someone is willing to become a successor trustee does not necessarily mean they are capable of doing so. If you have an extremely complex estate, a sizable investment portfolio or considerable real estate holdings, someone who is not financially sophisticated might not be up to the task. Talk with an experienced estate planning attorney who will be able to guide you through the selection of a trustee so that you end up with someone who is trusted and competent.
Reference: Ashland Daily Tidings (July 5, 2016) “Aging Happens: Four tips to help select your successor trustee”