How to Choose a Successor Trustee
Choosing a Successor Trustee is not something to take lightly. When an estate plan is centered around a revocable living Trust, the bulk of the assets are owned by the Trust and, therefore, under the control of the Trustee. As long as the Settlor (the person or persons who created the Trust) is capable (has legal capacity) of managing their own affairs, they are the Trustee, and continue to control their assets. If the Settlor becomes incapacitated, the Successor Trustee steps in and manages the assets in the Trust for the Settlor’s benefit. At the Settlor’s death, the Successor Trustee is charged with managing or distributing the Trust Estate in accordance to the directions provided in the Trust by the Settlor (much how a Will works).
The person you name as Successor Trustee depends greatly on your current situation and will most likely change over time. In fact, it is one of the most often-changed parts of an estate plan. For instance, if young children are involved, the Successor Trustee should someone who will manage the money for the children in the same way you would, and who will ensure it is used for the children’s best interests.
The older we become, however, the more likely it is that someone will need to step in to assist us with our own finances. While adult children may be fine paying final expenses and closing up the estate, it is not a given that they are the best choice to take care of your finances if you are unable to manage them on your own. Family dynamics should be taken into consideration when deciding if children will be named as Successor Trustees or not. If siblings do not get along, naming them as Successor Co-Trustees could be disastrous. Or, the children may be lovely and wonderful and not so good with money. In this case, placing them in charge of your finances would seem less than ideal.
When deciding on a Successor Trustee, it is important to take into account all these factors. Often, it is a family member tasked with this job; however, it does not have to be and should not be unless there is a family member truly able and willing to do the work. If there is no one appropriate within the circle of family or friends, an outside, neutral party may be the best choice. A professional fiduciary can be a perfect solution in this instance. Over my 20-year career, I have seen many times where a professional fiduciary is the better choice over a relative or friend. What’s most important is having an in-depth conversation with your estate planning attorney to ensure that all potential issues are addressed and all options investigated.