Successor Trustee

What is a successor trustee?

In some ways, the role of a successor trustee varies based on the type of trust. A trust is an estate planning tool that facilitates the transfer of assets outside of probate court. It involves three key parties:

• A grantor is the owner of the trust who transfers their assets to one or more beneficiaries.
• A beneficiary receives the assets through the trust.
• A trustee manages the trust for the beneficiary and has a duty to act in their best interest.

In a living trust, the trustee manages the assets during the grantor's lifetime and distributes them to the beneficiary upon the grantor's death. For this reason, many grantors choose to be their own trustee in a living trust. While they can appoint a co-trustee, it's vital to also name a successor trustee who can manage the trust if both the trustee and co-trustee become incapacitated. This is especially important to consider if the trustee and co-trustee are spouses.

Conversely, a testamentary trust is part of a last will and testament and only goes into effect once the grantor dies. The trust assets then transfer to the beneficiary at the end of a specified term. In this case, a successor trustee steps in if the initial trustee can't fulfill their fiduciary duty. Grantors ofte choose a successor trustee who is a trusted family member or financial institution skilled in asset management.

A successor trustee's responsibilities are typically the same as the initial trustee's. They'll manage the financial affairs of the trust according to its terms, file tax returns, and distribute the assets to the beneficiaries at the established time. That said, the grantor determines the successor trustee's duties in the trust agreement, which may or may not vary from the initial trustee's.

For a more in-depth understanding of their role, read our comprehensive guide to successor trustees.

Successor trustee FAQs 

What is the difference between a successor trustee and an executor?

A successor trustee manages assets held in a trust if the initial trustee is unable to, generally without the supervision of probate court. An executor settles a person's entire estate according to the terms of their will and under the supervision of a probate court.

How much power does a successor trustee have?

The terms of trust agreement and state laws dictate how much power a successor trustee has in managing a trust. That said, they only assume the role of trustee if the original trustee can't and they maintain a fiduciary duty to act in the beneficiary's best interest. 

What happens if a successor trustee doesn't accept the role?

If the successor trustee declines the role of managing the trust, an alternate successor trustee can step in. If the trust document doesn't name an alternate successor trustee, the beneficiaries may need to petition the court to appoint one. It's best to consult an attorney if you're in this situation.