How to choose the right guardian and trustee in your living trust when you don't have a perfect guardian or trustee.
How to Choose a Successor Trustee
Choosing the right successor trustee for your living trust
When making your living trust estate plan, you will need to identify key people to fill key roles. One of them is your Successor Trustee.
Your successor trustee is the person who will manage your assets by following the instructions in your living trust if you become incapacitated or when you pass away.
Being a successor trustee is a very important job, and choosing the right person requires careful consideration.
Our law firm has over thirty years of experience in helping successor trustees administer trusts. Through this experience, we’ve learned there are four characteristics that make a good successor trustee:
- Trustworthy. It is vital that you trust your successor trustee and that he or she will instill trust in your beneficiaries.
- Good Decision Maker. Your successor trustee will have broad authority over your trust assets, and will need to make good decisions including hiring an attorney and accountant, if and when to sell assets, and timing of distributions to beneficiaries.
- Good Communicator. This may be the most important quality. Many fights and even law suits initiated by beneficiaries against the trustee are because of miscommunication or lack of communication. Your successor trustee must be able and willing to set the expectations for the beneficiaries and keep them informed during the process.
It is always curious to see how once a parent dies, some beneficiaries all of a sudden desperately need their inheritance now (how did they make it before mom or dad died?). Your trustee needs to set expectations with a calm and steady hand. The trust administration attorney will help with the communication to the beneficiaries, but the trustee will be the point person.
We recently helped a trustee with a trust administration when her mother died. She was the oldest child and had three siblings. She did everything right, but she was such a poor communicator that her siblings did not trust her. In fact, one of them even hired his own attorney to oversee the process. Her inability to communicate with her siblings made things much more difficult than it should have been.
- Knows You and Your Family. It is a bonus if your trustee knows you and your family. This is the case in most situations. Most people name family members or friends as successor trustee. A familiar family member or friend can be reassuring to you and your beneficiaries.
Sometimes family or friends are not an option, and the only option is to name a professional trustee aka professional fiduciary. Professional fiduciaries can be a very good option. They often have a management or accounting background and are experienced in administering trusts. What they lack in familiarity with your beneficiaries, they can make up for in their professional approach to carrying out their duties.
Don't Overthink It
Choosing the right person as your successor trustee is important, but don’t make it a debilitating process. If you do not have an estate plan, you need one. Most people do not have the perfect successor trustee. And that’s ok because most of us are not perfect.
Choosing an imperfect someone and completing your estate plan is better than not having an estate plan and leaving your loved ones to go through probate with a judge choosing your executor.
Don’t overthink it. The four characteristics we list above are guidelines. Pick the most qualified person among your family and friends, and if none of them meet the basic criteria, then you can use a professional fiduciary.
You Can Change Your Trustee
And to take the pressure off, your decision is not set in stone. You can always amend your trust and change your successor trustee.
Many of our clients update their successor trustees every few years. Often your pool of candidates become more defined over time - your brother gets married and becomes more stable, your children get older and more mature, your friend or business partner show themselves to be even more reliable than you thought.
Your estate plan is a lot like your life. It is not static. It will change over time, and hopefully for the better.