Phone: 727-397-5571

What to Consider When Choosing a Successor Trustee

Once you have decided to create a revocable living trust, you have an important decision ahead of you: who to name as the successor trustee. After your passing, your chosen trustee will have access to your holdings and control over your assets—and if your successor doesn’t fulfill their duties, your beneficiaries will have to go to court to have them removed.

Find Someone Who Can Perform the Duties of a Trustee

Man Choosing a TrusteeIn order to choose the right trustee, it’s helpful to know what’s required in the role and the qualities that make a good trustee. A successor trustee is someone who will follow your instructions regarding trust property, make sure that the trust runs smoothly, and can handle challenges from beneficiaries or third parties. You may name a person as your successor trustee or a corporate fiduciary such as a trust administration attorney

Your successor trustee may be required to perform:

  • Financial duties. A successor trustee can pay your outstanding bills, access financial records, sell your property, make investments with trust funds, and deposit gains into your accounts.
  • Tax filing. Taxes for a trust and the final tax payment for a deceased individual are usually filed separately. After your death, the trustee must obtain a Taxpayer Identification Number (TIN) from the IRS for the trust, make sure that all income tax and other tax returns are filed, and any outstanding taxes are paid.
  • Accounting. Trustees are required to gather all assets together and make a detailed listing of everything held in the trust. They must also provide annual accountings to the court describing how trust property was managed.
  • Debt payments. Although the trust will likely avoid probate, your trustee will have to file a Notice of Trust with the probate court. This gives creditors the opportunity to come forward and make claims before the estate is settled. Trustees are also responsible for making sure all legitimate creditor claims are paid.
  • Investing. A trustee has the ability to invest and manage investment assets in order to grow the trust. While trustees may delegate their investment duties to a broker, they are still required to make impartial investment decisions and invest assets in a way that is fair to all beneficiaries.
  • Distributions to beneficiaries. One of the most important duties of a trustee is distributing assets to heirs according to the terms of the trust. You may hold all distributions to a specific schedule, or you could give your trustee discretion when deciding when and how much to distribute. For example, you may allow your trustee to give a partial distribution to a struggling beneficiary before the estate has been fully settled.

Who Might Not Be a Good Choice for Trustee?

Trustees have a fiduciary duty to the trust, meaning they are required by law to act in the best interests of beneficiaries and follow the purpose of the trust. However, there are many untrustworthy individuals who could use trust funds and accounts for their own benefit.

Knowledge of your assets and the personal details of your beneficiaries can be extremely valuable information. Your trustee should be loyal to you and the trust, avoiding potential conflicts of interest or personal gain. Avoid any person who might distribute property in a manner inconsistent with the trust document or override your intentions. 

Finally, there are a few practical factors to consider, such as the trustee’s location, age, and financial competence. Once you have chosen a successor, your trustee should agree to the appointment and be made aware of the duties and your wishes during your lifetime.

Whether you’re setting up a trust or have been named as the successor trustee, the attorneys at DeLoach, Hofstra & Cavonis can help you through the next steps and ensure a smooth transition. Contact us today to set up a consultation and get answers to your questions, or start reading our free book, Top 20 Rules for Protecting Your Florida Estate.

 

Announcement

Due to Hurricane Ian, our offices will be closed from Tuesday, September 27 to Thursday, September 29. If you need help, please private message us on our Facebook page or through the contact form on our website. We are monitoring both very closely. Thank you for your understanding and please stay safe! Please visit our Facebook page for updates.

X