How to Choose a Successor Trustee for My Living Trust

By John Cromwell

Many people who create living trusts choose to act as their own trustee. However, it is wise to plan ahead and appoint a successor trustee to take over after your death or in the event you become incapacitated and are no longer able to manage the trust. The successor trustee's role is to carry out the terms established in the agreement that created the trust -- for example, distributing the assets to your beneficiaries according to your original instructions.

Many people who create living trusts choose to act as their own trustee. However, it is wise to plan ahead and appoint a successor trustee to take over after your death or in the event you become incapacitated and are no longer able to manage the trust. The successor trustee's role is to carry out the terms established in the agreement that created the trust -- for example, distributing the assets to your beneficiaries according to your original instructions.

Step 1

List friends and family members whom you trust. Generally, you want to choose a person with whom you have a personal relationship. Although a trustee is required to comply with the terms of the trust, in some situations the trustee may have discretion regarding how the trust property is distributed. In those situations, you want someone who will likely understand your original wishes and distribute the property as you would have done.

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Step 2

Evaluate your potential trustees' financial and legal background. A trustee will be required to invest the trust property and enter into legal agreements on the trust's behalf. A good trustee should be familiar with the financial and legal world. You should choose someone who is organized, has experience in financial matters and has the time to manage the trust. When evaluating a potential trustee, consider her education, profession and how she handles her own personal assets. Those with a poor financial and legal background should not be chosen to be a successor trustee.

Step 3

Ensure that potential trustees can be impartial in managing the trust. A trustee must administer the trust impartially and for the benefit of all beneficiaries; those who cannot be impartial cannot be a successor trustee. You want to avoid using people who are beneficiaries of the trust or have a strong relationship with a beneficiary. For example, a beneficiary's spouse may not be a good choice as successor trustee.

Step 4

Consider hiring a professional trustee, such as a bank or law firm, if there is no friend or family member who could act as trustee. Research possible institutions and ensure that each has an experienced trust department with a good reputation.

Step 5

Negotiate with the potential trustee regarding the fees, if any, to be charged. Friends and family members may charge a fee, especially if you are choosing them because of their professional background. An institutional trustee certainly will charge for its services. Trustee fees are generally expressed as a percentage of the estate's value and range from 0.75 percent to 3 percent. The fee will depend largely on the amount of services the trustee will provide.

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Transferring Property From a Living Trust to a Successor Trustee

References

Resources

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