When does a successor trustee take over?
If you have a Revocable Living Trust (RLT), you understand the idea of a trustee. A trustee manages, invests, and distributes money and property to the appropriate people. You (and possibly your spouse, if applicable) will most likely act as the initial trustee. However, you may eventually step aside as trustee. If this occurs, the person you name as your successor will step in.
When you can no longer make your own decisions
Before you die, you may face incapacitation. If this occurs, you won’t capably manage day-to-day tasks such as investing or distributing a trust’s accounts and property. This is sometimes referred to as incapacity. When this occurs, the loss of control can overwhelm you. However, naming a reliable successor trustee will ensure someone can step in to manage the trust’s accounts. In fact, they can do so as long as you live, without court involvement. Resigning from serving as trustee does not mean that you lose benefits as a beneficiary.
You Decide
At one point, you may no longer want to serve as manager over the trust’s accounts and property. In this instance, you would resign as the initial trustee. Thus, allowing your successor to step in and pick up where you left off. Or you could allow your trustee to act with you as a co-trustee. While you are still alive, the successor trustee will manage, invest, and oversee the trust’s accounts and property for your benefit. They will also supervise anyone you designate should benefit from the trust accounts or property. Even if you hire a professional company to serve as your successor trustee, allowing them to act while you are still alive gives you a test run to see how they handle the responsibility. As long as you remain mentally able to make that assessment, and the trust allows for it, you would be able to fire the successor trustee and replace them.
Successor Trustee’s Duties and Responsibilities
Although your successor controls the trust’s accounts and property, the successor trustee also performs legal duties. In general, your successor trustee maintains a fiduciary duty to administer the trust. They are to do so solely in the interest of the beneficiaries and to deal with them impartially. As a “fiduciary,” the government holds them to a high standard of care. Additionally, the successor trustee cannot use any of the trust’s accounts or property for the trustee’s own benefit or for any purpose not expressly listed in the trust. Also, unless specifically authorized by the trust document, the successor trustee cannot enter into any transaction that would create a conflict of interest between the successor trustee and the trust or trust beneficiaries.
How to prepare a successor trustee
- Update Estate Planning Documents
To make sure your loved ones respect your wishes, create an estate plan. Also, keep your it up to date. Your successor trustee will rely on the trust’s written terms. So, do not give them faulty or outdated instructions.
- Create a Revocable Living Trust (RLT)
When reviewing your trust, make sure that the individual or entity you select as your successor trustee will act on your behalf. Also, choose a backup trustee in case something happens. Lastly, review the beneficiaries and what you want to give them. Do the amounts and timing of property distributions still apply? A beneficiary’s circumstances can quickly change.
- Set Up a Financial Power of Attorney (POA)
Review your financial POA to make sure that the person named to handle accounts and property owned by you individually remains able. In some instances, your successor trustee and agent under a financial power of attorney may be one and the same. But if not, make sure that these two individuals work well together.
- Prepare Healthcare Documents
Healthcare documents (such as a Medical POA, Advanced Directive or Living Will, and Health Insurance Portability and Accountability Act (HIPAA) authorization form) primarily focus on medical matters. However, they may also impact the financial matters handled by the successor trustee. If you expect to pay medical bills from accounts owned by the trust, grant your successor trustee access under a HIPAA authorization form. Without this, they will remain unable to access your medical information. What’s more, they will not be able to talk to these professionals if they have questions. Additionally, review the other healthcare documents. Make sure that they accurately reflect your wishes.
About Skvarna Law in Glendora and Upland, California
Skvarna Law Firm operates offices in Glendora and Upland, California. We provide legal services. We cover San Bernardino, Los Angeles, Orange, and Riverside Counties. This includes several cities. Upland, Ontario, Rancho Cucamonga, Fontana, Colton, Rialto, Chino, Chino Hills, Glendora, Claremont, Pomona, La Verne, Montclair, San Dimas, Azusa, Covina, West Covina, Diamond Bar, Walnut, La Puente, Corona, Norco & Mira Loma. Visit SkvarnaLaw.com to learn more.
