Training Your Trustee: What a Successor Trustee Needs to Know
One of the advantages of a living trust is that it allows you to manage, use, and enjoy property during your lifetime with the confidence that, after your death, someone you trust will step into your shoes, managing trust assets and making distributions to your beneficiaries as you intended. Should you become incapacitated before your death, that person (your successor trustee) would also oversee trust assets and distributions for your benefit.
The role of successor trustee carries great responsibility. The person you choose is a fiduciary, responsible for carrying out your wishes and acting in the best interest of your beneficiaries. It goes without saying that you want to choose a successor trustee who is honest, organized, and diligent.
But even the most qualified successor trustee can still struggle when they find themselves at the helm of the trust you created, trying to do the right things to honor you and serve your beneficiaries. It’s up to you to set them up for success in that important role.
Setting Your Successor Trustee Up for Success
The last thing you want is for your successor trustee to feel unprepared—but you’d be surprised how many trust creators (grantors) provide their successor trustees with almost no information about their future role.
Clarify Their Role and Responsibilities
Good communication is essential right from the start. That begins, of course, with ensuring your intended successor understands what is being asked of them and feels up to the task. Many people are honored to be asked to serve as a trustee and accept without fully comprehending what that means.
Be clear about the fact that they will step into your shoes after your death, and depending on how your trust is written, in the event of your incapacity. Their responsibilities will include managing, investing, and distributing trust assets according to your instructions in the trust document; they will also need to pay bills, taxes, and your final expenses. Of course, your successor trustee will also need to keep meticulous records and communicate with beneficiaries regarding the trust.
It may not be a full-time job, but serving as trustee can be demanding at times. Suggesting otherwise does a disservice to your intended successor. Help them understand what they will need to do, and when.
Communicate Your Intentions and Expectations
Being a trustee involves the management of assets, yes, but also navigating potentially complicated family dynamics. Prepare your successor to navigate the interpersonal, as well as the financial, aspects of your trust. For example, are there challenging relationships between beneficiaries that they should be aware of to avoid allegations of favoritism in making distributions?
Explain to your successor trustee your rationale for creating the trust, and your values and priorities in establishing it as you did. Do you want your successor to adhere rigidly to trust terms, or do they have some flexibility—such as to accelerate distributions for beneficiaries experiencing hardship?
Keep Important Documents Accessible (but Secure)
The trust document is the “operating manual” for your trust, so it’s a good idea to familiarize your successor trustee with it, as well as other relevant documents. Set aside some time to review the trust with your successor; while you don’t have to go through it with a fine-tooth comb, they should understand who your beneficiaries are and your general goals for the trust.
Your efforts to organize and secure information now will yield dividends when it is time for your successor trustee to assume their duties. You should keep an organized binder and/or digital file containing important documents, such as:
- The trust and any amendments
- A pour-over will, if you have one
- Durable financial power of attorney and advance health care directives
- Property deeds and vehicle titles
- Insurance policies
- List of assets and accounts, including financial institutions, account types, and account numbers
- Updated contact information for your estate planning attorney, accountant, and financial advisor
These documents should be stored securely, but in a way that your successor can readily gain access to them if needed. A fireproof safe is a good option, so long as your successor has access to it and knows the combination.
Fund Your Trust and Maintain an Up-to-Date Inventory of Assets
A trust is only useful if it’s properly funded. To avoid a situation in which your successor believes an asset is held in your trust, only to find out otherwise, speak with an estate planning attorney about how to fund (place assets in) your trust.
Over time, you may acquire new assets and place them in the trust; existing assets held in the trust may be transferred or cease to exist. Keep a list of assets with your other important estate planning documents; review and update it regularly. When the time comes for your successor to assume management of the trust, they will be grateful not to have to go on a scavenger hunt to identify the assets for which they are responsible.
Put a Support Team in Place
Serving as a trustee is a big responsibility, but your chosen successor doesn’t have to go it alone. If you have support from an estate attorney, financial advisor, and other professionals, connect your successor with these people. Having access to professional advice can save your successor trustee a lot of time and stress, and preserve trust assets.
Knowing that there is a knowledgeable support system in place can also make your successor trustee feel more comfortable accepting the role. While providing contact information for your team of professional advisors will be helpful to them, making personal introductions is even better. If you can, set up meetings so your intended successor can ask any questions they may have.
Work with an Experienced Trust Administration Attorney
A trust can help you avoid probate and maintain flexible control over assets during your lifetime. Preparing your successor trustee to assume their eventual duties can give you peace of mind knowing your wishes will be carried out even after you’re gone.
For more guidance on how to train your successor trustee and give them the support they will need, contact The Law Offices of Dana M. Kyle, P.A. to schedule a consultation.
