Responsibilities of a Successor Trustee Upon the Trustees' Deaths

By Beverly Bird

Initially, a successor trustee's job is one of waiting in the wings. As the name of the position suggests, this individual stands by, ready to succeed the existing trustee – or multiple trustees, which may be the case when a married couple forms a trust together. The initial trustee is typically the grantor of a revocable trust. He manages the trust he created and funded during his lifetime, but when he can no longer do so, and if his co-trustee has predeceased him or dies with him, his successor trustee steps in and takes over.

Trust Becomes Irrevocable

Your trust is revocable only when you, as the grantor, are capable of managing it and overseeing the assets you placed into it. It becomes irrevocable when you die. Typically, the individual you named as your successor trustee has no leeway to do things his way when he takes over – he must follow the directions you laid out in your trust documents. He only has flexibility if you specifically granted it to him when you laid out the terms of your trust.

Making Notifications

The successor trustee's first responsibility when you die is to let your trust beneficiaries know that this has occurred and he is now in charge. He should also let them know that they have a right to see the trust documents. He will have to notify your creditors, and he should make contact with your bank, investment institutions and other entities holding your assets, providing them with a copy of your death certificate, if necessary.

Protect your loved ones. Start My Estate Plan

Identifying and Managing Assets

Ideally, your trust's formation documents include a detailed list and description of the property with which you've funded it. This will make your successor trustee's job much easier, because he must locate all assets or their corresponding paperwork, such as deeds for real estate or insurance policies. Your successor trustee has a fiduciary responsibility to handle the trust's assets wisely until the trust closes, and this can be a fine line. He can't manage them too conservatively, because this might cheat your beneficiaries out of the full value of their inheritances. For example, if you left $10,000 in a shoe box, he would be wise to move the money to a savings or investment account so it can earn interest. He cannot make risky investments, however, so he shouldn't sink the $10,000 into an exploratory oil rig off the coast of a third world country. If anyone owed you money when you died, your successor trustee must collect and deposit it. He might have to have certain assets appraised, such as real estate or artwork, to ensure a fair distribution among your beneficiaries when the trust closes.

Paying Debts, Taxes and Expenses

Trusts avoid probate, but they don't avoid payment of your debts, so your trustee must take care of these as well. Tax returns must be prepared and filed, both for you and for your trust, because ideally it's been earning money from its investments. When the trust closes – or annually, if it remains up and running – your trustee must typically submit a report to your beneficiaries, showing all payments he has made and what they were for.

Making Distributions

Your trust documents determine what becomes of your trust after your death. You have two options – you can instruct that your successor trustee distribute all the trust's principal assets to its beneficiaries immediately, or you can direct that he move the principal assets into other trusts when you die. These subsequent trusts can meet your long-term estate planning needs, such as if you want your beneficiaries to inherit incrementally, not in windfalls. In either case, your initial trust closes after its assets are distributed elsewhere. You can name your successor trustee to continue managing these other trusts, or you can appoint someone else to take over, such as your bank's trust department.

Protect your loved ones. Start My Estate Plan
What Happens to a Revocable Trust When the Trustee Dies?

References

Related articles

How to Replace a Trustee of a California Living Trust

A living trust is a revocable trust created during its creator's lifetime. The creator is also the trustee, and he can tweak its terms any time he likes. He can also name another trustee, if he wishes, and remove that trustee at any time. When the creator of the trust dies, however, his trust becomes irrevocable. This shifts the power to his successor trustee, the individual he named to take over for him after his death. Under some circumstances, California law allows the decedent's beneficiaries to remove the named successor trustee and nominate someone else to serve instead.

How to Liquidate Trust Assets of a Decedent

When you die, the trustee of your trust must look to the trust document for guidance on distributing trust assets. Depending on the kind of trust you've set up, your assets may or may not have to go through probate. The assets of a living trust normally do not have to go through probate, but the assets of a trust created by your will always do. If the trust document specifies that its assets are to be distributed upon your death, your trustee must methodically liquidate trust assets – she must terminate the trust by paying off all of its creditors and distributing any remaining assets to its beneficiaries.

Living Trusts & Bank Accounts

You can place your bank accounts and other assets in a living trust so they bypass probate when you die. Avoiding probate generally saves time and money for the beneficiaries of your estate. You must physically change the titles of your assets from your individual name to the name of your trust for them to skip the probate process upon your death.

LegalZoom. Legal help is here. Start Here. Wills. Trusts. Attorney help.

Related articles

Does a Trustee Have to Give a Beneficiary a Copy of the Trust?

Rules regarding inheritances are some of the strictest in law. After all, they deal with your lifetime savings and the ...

How to Get Rid of a Trust

Trusts can be great estate-planning tools -- at least until you want to undo one. When this occurs, you must usually ...

Can an Executor of an Estate Distribute Gifts From a Trust?

An executor is to a trustee what a cat is to a dog -- they’re both animals but different species. Executors and ...

When Does a Testamentary Trust Will Go Through Probate?

When you die, many of your assets will have to go through probate before your estate’s representative can distribute ...

Browse by category
Ready to Begin? GET STARTED