Why Do I Need a Successor Trustee?

If you are a Colorado resident who wants to minimize the trouble and expense of transferring your assets when you die, you have probably considered establishing a living trust. A living trust is a document that places your assets in a trust for your benefit during your lifetime and provides for the transfer of those assets after your death. During your life, for as long as you are able, you can be the trustee and remain in full control of your assets. During disability or after death, the control is transferred to a successor trustee.

A living trust, or revocable trust (when properly drafted and funded), avoids probate and has the added advantage of allowing a trusted person to step in and manage your assets during your life for your benefit if you become incapacitated. Some people are apprehensive about appointing a successor trustee, fearing that this will somehow diminish their control over their assets. Not only is this fear misplaced, a successor trustee is necessary for the proper administration of a living trust.

What Does a Successor Trustee Do?

If, during your lifetime, you become incapacitated and are unable to take care of your own financial affairs, your successor trustee steps in and manages them for your benefit, overseeing investments and spending trust money to pay for your care and other needs. Having a trust with a successor trustee in place makes this process much more seamless than it would be otherwise. Depending on the length of your incapacity, the trustee’s duties may also include filing income tax returns on behalf of the trust.

Upon your death, your successor trustee assumes control of your assets. Often, living trusts are created primarily to avoid probate, so the successor trustee may simply have to distribute the assets as the trust directs. If the trust is to continue after your death, the successor trustee will manage the assets for your named beneficiaries’ benefit. If there are assets outside of the trust that are subject to probate, the successor trustee will also have to work with the executor of your estate, if he or she is not also the executor.

Whom Should I Choose as Successor Trustee?

Your choice for successor trustee will depend on the goal of the trust and your own circumstances. The successor trustee should be someone you trust deeply. It’s helpful if the trustee understands financial matters, but not critical, so long as he or she can be trusted to act in your best interest and seek advice when needed.

If the trust is intended to simply distribute your assets to beneficiaries upon your death, a close family member is probably a good choice for successor trustee. Choose someone you feel can handle the responsibility of acting as trustee. Also, be mindful of the impact of your choice on relations between family members. Will choosing one adult child as successor trustee cause a rift between siblings? If you choose co-trustees, can they work together?

If the trust is intended to continue for a period of time after your death, you need to be sure your chosen successor trustee is up to the task of managing your assets. If no family member fits the bill, a professional trustee, with experience and objectivity, may be the right choice. However, most professional trustees require a minimum amount of assets in the trust to take on management of it, and charge a percentage of trust assets as a management fee.

If you are considering a revocable living trust, but need guidance regarding the selection of a successor trustee, contact the experienced estate planning and probate attorneys at Davis Schilken. Call us at 303-670-9855 to arrange a consultation at one of our two locations in The Denver Tech Center and Golden, Colorado. We look forward to working with you.