A competent and reliable successor trustee can help achieve your goals and provide continuity of management
Ready to start your estate plan?
Excellent
by Edward A. Haman, J.D.
Edward A. Haman is a freelance writer, who is the author of numerous self-help legal books. He has practiced law in H...
Updated on: April 5, 2023 · 4 min read
Setting up a trust requires designating an initial trustee—and should also involve designating a successor trustee.
The successor trustee takes over the responsibility of managing the trust if the current trustee dies, becomes incapacitated, or is no longer willing to serve as trustee.
If you establish a trust in your will, it is called a testamentary trust. The trust does not come into existence until your death, so you cannot be the initial trustee.
Your will must appoint the initial trustee, but it should also provide for one or more successor trustees. Often, the executor who oversees the probate of the will is designated as the trustee, but this is not always the case.
If you create a trust that comes into existence while you are still alive, it is known as a living trust, or an "inter vivos" trust. Living trusts come in two types: revocable and irrevocable.
Most people who create a revocable living trust designate themselves as the initial trustee because a central purpose of a revocable trust is for the trust maker to retain full control over the trust assets.
A successor trustee is designated to take over management of the trust after the trust maker's death or incapacity.
Irrevocable living trusts are typically created to remove assets from the maker's possession so that the maker is eligible for certain benefits, such as Medicaid. If you create an irrevocable living trust, you cannot retain control of the trust assets. Thus, you may not serve as a trustee.
Trusts are governed by state law. Generally, any mentally competent adult may serve as a trustee. A trustee does not need to be an attorney.
Some companies specialize in the business of serving as trustees. These are often professional trust-management companies, law firms, or trust divisions of banks. Such entities tend to be trustworthy managers, but they often charge the trust significant fees. Many people choose a trusted relative or friend to serve as their successor trustee to avoid these fees.
Several characteristics should be considered when selecting a trustee, and these also apply to a successor trustee.
Some people appoint two or more individuals to serve as successor co-trustees. This requires the trust document to spell out how decisions will be made in the event of disagreement among the trustees.
Sometimes trust beneficiaries are appointed as successor trustees, but this often leads to conflict among the beneficiaries. It is usually best to avoid appointing co-trustees or beneficiaries.
Appointing a successor trustee can help ensure that your trust is managed in accordance with your wishes.
You may also like
What Does 'Inc.' Mean in a Company Name?
'Inc.' in a company name means the business is incorporated, but what does that entail, exactly? Here's everything you need to know about incorporating your business.
October 9, 2023 · 10min read
How to talk to your family about estate planning
Want to talk to your parents or grandparents about estate planning, but feel like the topic is taboo? You're not alone. Discussions about estate planning are difficult for many families. Use our tips to broach the subject with sensitivity.
May 17, 2023 · 2min read
What Is a Power of Attorney (POA)? A Comprehensive Guide
A power of attorney can give trusted individuals the power to make decisions on your behalf—but only in certain situations.
August 29, 2024 · 20min read