A revocable living trust is one of the most common additions to a comprehensive estate plan. If you decide to incorporate a revocable living trust (RLT) into your estate plan you will need to appoint a Trustee. Often Settlor (creator) of an RLT is also the Trustee. If you decide to appoint yourself as the Trustee, you will still need to appoint a successor Trustee. Deciding who to appoint as the successor Trustee of your revocable living trust is often a much more important decision that you may realize.
What Is a Revocable Living Trust?
Trusts can be broadly divided into one of two categories – testamentary or living (inter vivos) trusts. Testamentary trusts are typically activated by a provision in the Settlor’s Last Will and Testament and, therefore, do not become active during the lifetime of the Settlor. Conversely, a living trust, activates during the Settlor’s lifetime. Living trusts can be sub-divided into revocable and irrevocable living trusts. If the trust is a revocable living trust, as the name implies, the Settlor may modify or terminate the trust at any time and for any reason. An irrevocable living trust, on the other hand, cannot be modified or revoked by the Settlor at any time nor for any reason once active.
Why Might I Have an RLT in My Estate Plan?
There are a variety of ways in which a revocable living trust might fit into your overall estate plan; however, one of the most common ways is as an incapacity planning tool. As the Settlor of the trust, you create the trust and name yourself as the Trustee. You then name the person you would want to take over control of your assets in the event of your incapacity as the successor Trustee. Assets are then transferred into the trust. As the Trustee, you continue to have access to, and control over, those assets just as you did before creating the trust. If, however, you become incapacitated, your successor Trustee takes over as the Trustee automatically. As the Trustee of the trust, your chosen successor now has control of the trust assets without the need for court approval or interference. In addition, as the Settlor of the trust, you even have the ability to use the trust terms to define “incapacity” or to set up procedures to be followed to determine under what conditions the successor Trustee should take over as Trustee.
What Does the Successor Trustee Do?
If the Trustee remains willing and able to serve, the successor Trustee does not have any trust duties; however, if the Trustee becomes unable or unwilling to serve, the successor Trustee takes over as Trustee. The overall job of a Trustee is to protect and manage trust assets while administering the trust using the trust terms created by the Settlor. Among the specific duties and responsibilities of a Trustee are the following:
- Managing and protecting trust assets
- Abiding by the trust terms unless they are impossible, illegal, or unconscionable
- Investing trust funds using the “Prudent Investor Standard”
- Monitoring trust investments
- Communicating with trust beneficiaries
- Resolving conflicts among beneficiaries
- Making discretionary decisions
- Distributing trust funds to beneficiaries
- Approving or denying distributions if given discretionary authority
- Keeping detailed trust records
- Preparing and paying trust taxes
Who Should I Choose as My Successor Trustee?
When deciding who to designate as your successor Trustee, you should choose someone who can respect your wishes. Your successor Trustee should work diligently to fulfill your stated trust purpose, even if he/she doesn’t agree with the purpose. Ideally, your successor Trustee should also have experience in the financial and/or legal field because the job of Trustee involves investing trust assets and understanding the laws that apply to trust administration. You should also try to find someone who does not have any conflicts with the trust beneficiaries. If your successor Trustee has a significant personal relationship with a beneficiary, this can often lead to a conflict of interest that can harm the trust because your Trustee should remain neutral. Finally, always ask the prospective successor Trustee if he/she is willing and able to serve in that function before making the appointment official.
Contact a Waukegan Living Trust Attorneys
For more information, please download our FREE estate planning worksheet. If you have additional questions or concerns regarding who to appoint as your successor Trustee for a revocable living trust, contact the experienced Waukegan living trust attorneys at Hedeker Law, Ltd. by calling (847) 913-5415 to schedule an appointment.