If you have a revocable living trust, you probably named yourself as trustee so you can continue to manage your own financial affairs. Eventually, however, someone will need to step in for you when you are no longer able to act due to incapacity or death.
The Successor Trustee plays an important role in the effective execution of your estate plan. The choice of a Successor Trustee is one of the most important choices our clients make.
Responsibilities of a Successor Trustee
At Incapacity: If you become incapacitated, your Successor Trustee will step in and take full control of your finances for you – paying bills, making financial decisions, even selling or refinancing assets. Often your Successor Trustee will also serve as your Agent under your Financial Power of Attorney.
After Death: After you die, your Successor Trustee acts just like an executor would – takes an inventory of your assets, pays your final bills, sells assets if necessary, has your final tax returns prepared, and distributes your assets according to the instructions in your trust.
What You Need to Know:
- Trustees are fiduciaries. A fiduciary is a person to whom property or power is entrusted for the benefit of another. A fiduciary duty in a trust is the legal duty to act solely in the beneficiary’s interests. Your Successor Trustee will be able to do anything you could with your trust assets, as long as it does not conflict with the instructions in your trust document and does not breach any fiduciary duty.
- Your Successor Trustee will be acting without court supervision, which is why your affairs can be handled privately and efficiently – and probably one of the reasons you have a living trust in the first place. This also means it will be up to your successor trustee to get your trust administration started and keep it moving along.
- It is not necessary for the Successor Trustee to know exactly what to do and when, because your attorney, CPA, and other advisors can help guide him or her. For that reason, it is important that you name someone who is responsible and conscientious.
- Because a Successor Trustee has a lot of responsibility, you should choose carefully. This is not an “honorary” position – real work and responsibility come with the appointment.
- A Successor Trustee can be an adult child, a relative, or trusted friend, or a professional, (such as a CPA or attorney), or an institutional trustee (such as a bank, trust company or law firm).
- The Successor Trustee should be one you know and trust, whose judgment you respect and who will also respect your wishes.
- If you choose an individual as your Successor Trustee, you should name more than one in case your first choice is unable to act.
Things to Consider:
- When choosing a Successor Trustee, keep in mind the type and amount of assets in your trust and the complexity of the provisions in your trust document. For example, if you plan to keep assets in your trust after you die for your beneficiaries, your Successor Trustee will have more responsibilities for a longer period of time than if your assets will be distributed all at once.
- Consider the qualifications of your candidates, including personalities, financial or business experience, and time available due to their own family or career demands. Taking over as trustee for someone can take a substantial amount of time and requires a certain amount of business sense.
- Be sure to ask the people you are considering if they would want this responsibility. Don’t put them on the spot and just assume they want to do this. Please know that no one you name in your trust will be obligated to serve and may decline to do so. This is one reason why it is important to name one or more “back-ups.”
- A Successor Trustee shoulders significant responsibility and performs real work. Your trust document should provide for fair and reasonable compensation.
- Since individuals are human and subject to illness, death or may be overwhelmed by other life circumstances and not able to serve, we recommend that you name an “anchor” institutional trustee to step in if your named individuals can’t serve or choose not to serve for some reason.
The Role of the “Anchor” Institutional Trustee
We encourage clients to name multiple contingent Successor Trustees so that if their first choice cannot serve for some reason, the named “back-up” can step in to avoid a trustee vacancy. While some clients can compile a list of several qualified adult family members and close trusted friends from whom to select as their Successor Trustees, many clients have only one or two candidates.
By naming multiple contingent Successor Trustees, you lessen the likelihood of a trustee vacancy. Nevertheless, it is prudent to anchor the list of Successor Trustees with an institution that, unlike an individual, does not get sick or die. Examples of institutional trustees include banks, trust companies and law firms.
Introducing Legacy Fiduciary Services, PLC (LFS)
Legacy Fiduciary Services, PLC, an affiliate of Carrell Blanton Ferris & Associates, PLC, is a law firm dedicated to serving as trustee of trusts created and governed pursuant to the laws of Virginia.
LFS does not manage the investment of trust assets but works with your financial advisor, who continues to manage your assets (unless you instruct us otherwise) while we administer your trust.
The attorneys at LFS are dedicated to ensuring that your careful planning is implemented. We make it our job to stay current with changing trust laws and regulations, and we work closely with financial advisors like yours to help ensure that your needs and the needs of your loved ones are being met.
Advantages of Appointing LFS as Your Successor Trustee:
- Fees charged by LFS are generally less than those charged by banks and trust companies. Although additional fees will be charged by your financial advisor, usually these combined fees are less than the fees charged by banks and trust companies for comparable services.
- As a law firm, LFS can manage a trust for generations.
- LFS is served by the estate planning lawyers of Carrell Blanton Ferris & Associates, PLC, who understand the role and duties of serving as trustee.
- Like banks and trust companies, LFS can be objective and independent when dealing with beneficiary requests and are less influenced by family dynamics.
- Checks and Balances. Since LFS contracts with non-affiliated investment advisors to manage the investment of the trust assets, it will provide independent oversight and analysis of your financial advisor’s execution of the investment strategy and compliance with the trust documents.
- Personal Service. LFS is a law firm where a specific attorney will work to establish a long-term relationship with you, your financial advisor and your beneficiaries.
How to Name Legacy Fiduciary Services, PLC in Your Trust:
If you would like LFS to serve as your “anchor” institutional trustee or as a primary or secondary Successor Trustee, please advise your attorney. Your attorney will ask you to sign a disclosure and acknowledgement form at your signing meeting.
Unless you name LFS as your primary Successor Trustee, it will serve only if all your other named Successor Trustees fail to serve for some reason. There is no charge for having LFS named as a Successor Trustee. LFS will charge no fees unless it steps in to serve as your Successor Trustee.