The nomination of the successor trustee of a trust is critical in establishing an estate plan. The successor trustee takes office after the death or disability of the grantor, thereby becoming responsible for the administration of the grantor’s trust estate.
Here’s what the successor trustee can expect to do:
1. Identify, evaluate and protect the trust assets, e.g. locate the trust agreement and other valuable documents, examine the grantor’s mail, find insurance data and evidence of financial accounts, and secure the grantor’s car, residence, business and other assets.
2. Obtain the services of attorney, CPA, insurance agent, financial professionals and others to help locate and evaluate assets and to provide professional advice and assistance.
3. Take custody of the grantor’s mail.
4. Cancel unnecessary subscriptions and services.
5. Notify beneficiaries and heirs; provide them with copies of documents reflecting their interest in the Trust assets.
6. Arrange to sign on financial and other accounts.
7. Pay those bills which become due.
8. Authorize preparation of tax returns and arrange for the payment of all state and federal income taxes and any estate taxes.
9. Liquidate assets, as necessary, to provide cash flow and facilitate distribution.
10. Prepare an accounting, including assets on hand at the beginning of the Trust administration, income and disbursements, and assets on hand at the end of the accounting period.
11. Distribute the net trust estate to the beneficiaries, as the trust agreement requires.
The Successor Trustee owes a fiduciary duty to the grantor and to all the
beneficiaries. He/she must perform all services in the best interests of the trust estate and all the beneficiaries, and not with a view to his/her own possible self-interest. The successor trustee is entitled not only to reimbursement of reasonable out-of-pocket expenses, but also to reasonable fees for trustee services.
Periodically, the grantor should review the nomination of successor trustees in the trust, making changes as necessary. Some prospective successor trustees may have died, become disabled or otherwise ineligible or less desirable to serve. Even the nomination of corporate fiduciaries requires monitoring: Some trust companies may no longer exist, or may decline to accept the administration of “smaller” trusts.
Jerry Kessler practices law in Santa Clarita. You may contact him at 661-255-1001 for a confidential consultation.