When a revocable living trust is set up, a successor trustee is named so he can step in and help administer and settle the trust upon the death of the trustor or the person who creates the trust. The successor trustee is also responsible in taking over should the trustor becomes mentally incapacitated. Basically, it is the fiduciary duty of the successor trustee to protect the asset of the trustor. However, while the trustor is still alive, the trustor remains the trustee in a living trust and the successor trustee will assume the role the moment when the grantor is no longer able to manage the trust by himself by reason of death or incapacity.
Choosing the right successor trustee:
Heavy is the responsibility and the burden of a successor trustee during the trust administration. But his specific duty and obligation would greatly depend on the terms and conditions set forth in the trust agreement.
Generally, the responsibility when serving as a trustee requires time and energy – and it can even be lengthy as the trust can possibly take years after the trustor’s death. Thus, it is important to choose someone who is healthy, trustworthy, and competent when appointing the right successor trustee. It also helps to appoint someone who is legally knowledgeable and financially adept to do the job. In some cases, it is also wise to add “backup” successor trustees if your first choice is not available.
Responsibilities of a successor trustee
The following are the duties and responsibilities of a successor trustee:
- Locate and protect the estate assets
The first step in the fiduciary duty of the trustee is to locate the assets as indicated in the trust and to protect them against creditors and the like.
- Collect life insurance policies or annuities on which the trust names a primary beneficiary
Once the trustor has named the trust as the beneficiary of a life insurance policy, it is the duty of the trustee to collect such policies or annuities related thereto.
- Coordinate with an executor should there be a need for probate
In some cases, the existence of a living trust may still result to the possibility of court involvement or probate. It is the duty of the trustee to facilitate with the executor should there be a court involvement.
- Obtain the value of trust assets including real estate appraisals
At one point, the trustee may be required to appraise the trust assets. This is important in order to establish the true fair market value of a certain property in the event of a dispute.
- Creditor identification and payment of debts
As trustees, it is their obligation to identify the grantor’s creditors and pay the grantor’s debt to them accordingly.
- Determination of tax liabilities
Upon obtaining the appraised value of the properties, it is also the duty of the trustee to determine tax liabilities involved and settle them accordingly.
Indeed, serving as a successor trustee can be a daunting task. In matters like these, it may also be fitting to work with an estate planning attorney so you will be provided with better legal options when it comes to trust administration.