Everything You Need To Know About Selecting A Successor Trustee

August 27, 2021

Trusts are an essential part of legacy and estate planning as they provide the best security over a person’s assets during and after life. A trust allows a grantor, or creator of the trust, to set aside possessions and assets for assigned beneficiaries following their death or incapacitation. There are several types of trusts to choose from, but regardless of this, you’re going to require the assistance of a successor trustee to manage the trust in the event that something happens to you. If you’re asking yourself “what is a successor trustee and why do I need one?”, you’re not alone. Take a look below to learn more about successor trustees and how to go about selecting them.  

legacy-wealth-planningWhat is a Successor Trustee?

A successor trustee is a person or group of people appointed to manage a trust when the grantor is no longer capable of managing it themselves. This may be due to the grantor becoming incapacitated, losing the ability to make decisions, or passing away. The successor trustee is responsible for administering and settling a trust in the event that one of these circumstances occurs. 

Duties of the successor trustee vary case by case as these terms are set by the grantor, but most commonly, trustees are responsible for overseeing the trust and managing the distribution of assets when the time comes. They will also be responsible for notifying relatives and proper institutions of the death or incapacitation. Often, the role of successor trustee lasts for many years making it a rather large commitment that may also be quite time-consuming.  

Successor trustees can be any trusted adult you choose such as adult children, relatives, trusted friends, or professional trustee services like those from Anderson, Dorn & Rader. 

How to Select a Successor Trustee

When it comes time to select a trustee, the grantor has a few options. It may be recommended that one person be appointed to serve as the successor trustee or it may be suggested to have multiple trustees. Having a single person act as successor trustee helps avoid potential conflicts between co-trustees during the administration of the trust. For this reason, it’s a common approach in estate planning to assign one person as the trustee at a time. So long as the successor trustee maintains contact with beneficiaries, keeps them informed about the trust administration, and fulfills the trustee’s responsibilities under both the law and the provisions of the trust document, appointing a single successor trustee can be a great option.

However, many trust makers are reluctant to place the entire responsibility for trust administration on just one person. Because of this, a grantor may appoint two or more trusted adults to serve as successor co-trustees. This method may be beneficial not only for the trustees but for the grantor as well. For instance, dividing the trustee’s responsibilities will help make the job of serving as a trustee much more manageable. To explain, a grantor may appoint a professional trustee service to be in charge of handling trust investments or accounting and tax information while another appointed trustee such as a family member or friend handles the distribution of assets and other similar duties. Likewise, having successor co-trustees may ensure the process of checks and balances which ultimately safeguard your trust from potential abuses of authority.   

Advantages and Disadvantages of the Co-Trustee Approach  

To determine whether your trust will be better in the hands of a single successor trustee or multiple trustees, you need to first understand the advantages and disadvantages of having successor co-trustees managing your trust. Some of the advantages of the co-trustee approach include:

  • Underscores the creation of checks and balances that prevents a single trustee from abusing their authority.
  • Shares and separates the responsibilities of trust administration for expedited results. Such responsibilities may be appointed based on the trustee’s strengths and skills which may also improve results.
  • Improves the line of communication through each channel. If one trustee is not available, it’s likely that another will be. 
  • Beneficiaries of the trust may also be more likely to accept the actions and decisions of unified co-trustees as opposed to the decisions of a single trustee.

Some of the disadvantages of the co-trustee approach to consider are:

  • The possibility of disagreements between co-trustees leading to conflict and preventing the trust from being administered. 
  • Delays may result if all co-trustees are unable to work together to conduct trust business.
  • The cost to compensate multiple trustees is typically higher with the co-trustee approach. 

Choosing the Right Successor Trustee Approach for You

Before choosing whom to name as a successor trustee, you should discuss the options with your attorney and other professional advisors. Doing so will help you identify some of the potential pitfalls and complications that can arise with regard to your successor trustee choice. During this discussion, you may realize the need to make changes to your estate planning documents such as adding or eliminating beneficiaries or editing your assets. 

Before determining what the right approach is for you, consider the following questions regarding potential successor trustees:

  • How well does the individual I want to name as trustee work with others? Will they be able to remain neutral and enforce the guidelines of the trust without creating conflict with others?
  • Does the person you plan to name as trustee have sufficient time and flexibility for their duties? Being appointed successor trustee requires quite a bit of attention, therefore, whoever is appointed to the position should have plenty of time to dedicate to such a job.
  • If co-trustees are named, should they have the authority to act independently? You can create a co-trustee dynamic that still allows trustees to perform certain duties independently from other trustees. 
  • If multiple co-trustees are chosen, how will conflicts between trustees be handled and how will decisions be made?  

Successor Trustee Services from AD&R

It can be extremely difficult to determine what the best management option for your trust is. Fortunately, there are professionals out there to help make the decision more simple. If you’re struggling to appoint a trustee or group of trustees, connect with the expert estate planners at Anderson, Dorn & Rader to learn more about your options. As estate planning attorneys with extensive experience serving as professional trustees, they’re more than qualified to help you make the right decision regarding your legacy. 

Whether you nominate a single successor trustee or multiple co-trustees, carefully considering the pros and cons of each approach can help ensure that your wishes for the handling of your estate and trust will be honored. Contact us today so we can review your current successor trustee selections or create an estate plan with the right people in charge to assist you when needed.

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