How to Choose a Successor Trustee

August 30, 2018

irrevocable trust
When you establish a revocable living trust, you are also generally the initial Trustee of the trust, administering the trust assets for your own benefit as a beneficiary of the trust. If you are married, your spouse can be a trustee with you. This way, if either of you become incapacitated or die, the other can continue to handle your financial affairs without interruption. What happens if you and your spouse are unable to serve as trustees due to incapacity or death?  Generally, your revocable living trust will provide for a Successor Trustee to manage your trust assets for your benefit.  The Trustee should be prepared to manage your financial affairs by collecting income, paying bills/taxes, selecting health-care professionals if needed, providing for your well-being, providing for dependents if any, and keeping accurate records.

Who Can Be Your Successor Trustee

Some people choose an adult son or daughter, a trusted friend or another relative. Some like having the experience and investment skills of a professional or corporate trustee (e.g., a bank trust department, trust company, or law firm). Naming someone else as trustee or co-trustee with you does not mean you lose control. The trustee you name must follow the instructions in your trust and report to you. You can even replace your trustee in your revocable living trust should you change your mind.

Consider Successor Trustees after Your Death for Beneficiaries

At death your assets can be left outright or continuing sub-trust for asset protection of your heirs/beneficiaries. Sub-trusts provide asset protection to your beneficiaries from their own creditors, or potential x-spouses.  If you leave your assets in sub-trust for asset protection of your beneficiaries, consider if each heir should be their own trustee or if a professional trustee, or another person would be a better choice.  For special needs beneficiaries, or a spendthrift beneficiary, often a professional trustee is helpful.

When to Consider a Professional or Corporate Trustee

You may be elderly, widowed, or in declining health and have no children or other trusted relatives living nearby. Or your candidates may not have the time or ability to manage your trust. You may simply not have the time, desire or experience to manage your investments by yourself. Also, certain irrevocable trusts will not allow you to be trustee due to restrictions in the tax laws. In these situations, a professional or corporate trustee may be exactly what you need: they have the experience, time and resources to manage your trust and help you meet your investment goals.

What You Need to Know

Professional or corporate trustees will charge a fee to manage your trust, but generally the fee is quite reasonable, especially when you consider their experience, the services provided, and the investment returns that a professional trustee can deliver.

Actions to Consider

  • Honestly evaluate who is the best choice to be your own trustee to invest and manage assets for your own benefit.
  • Evaluate your trustee candidates carefully and realistically.
  • If you are considering a professional or corporate trustee. Compare their services, investment returns, and fees.

We can help you select, educate, and advise your successor trustees so they will have support and know what to do next to carry out your wishes. Give us a call today at (775) 823-9455 to schedule a consultation.

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