What to Know About Appointing a Successor Trustee

One of the biggest challenges in estate planning is making decisions now that won’t take effect until decades into the future. No one, not even estate planning attorneys, can accurately predict what your family’s dynamics will be in the years after your death. However, thoughtfully appointing a successor trustee when forming your trust can provide you a safety net in case things change in ways you don’t expect.

What is a Successor Trustee?

When you create a trust, you have the authority to name the person or people you want to be responsible for managing it. That person is a trustee. They have the job of following the directions in the trust documents, managing your assets, and making distributions to your intended beneficiaries. A successor trustee is an alternate person, put in place at the time the trust is formed, to take over in case your primary trustee can no longer perform their fiduciary duties.

If you are creating a revocable living trust, you (and possibly your spouse) will be the initial trustees. You will retain all the authority to manage, use, and invest your assets and money. Your successor trustee is the person you want to handle the trust’s affairs after you die or become incapacitated.

When Does a Successor Trustee Take Over?

Unlike a probate estate, a trust is a legal entity separate from you or your trustee. In some ways, it is more like a personal corporation. It is designed to outlive you, and it may outlive your first choice for trustee as well. When a trustee dies, the successor trustee takes over the management of the trust, stepping into the role automatically, without needing to get the Florida probate court involved.

However, serving as a trustee isn’t always a lifetime appointment. A successor trustee can also be called to step in if the initial trustee:

• Becomes unable to perform their duties due to age or physical or mental health
• Is no longer able to commit the time and effort necessary for trust administration
• Steps down or asks to be removed
• Is removed for violating his or her fiduciary duties

Until one of those things happens, the successor trustee has no duties and no obligations to the court, or the beneficiaries. However, it is often wise for the successor trustee to stay updated on the status of the trust. If the beneficiaries believe there is trouble in the trust administration, having a successor trustee that doesn’t know what is going on will likely make the problem worse before it gets better.

Can a Successor Trustee Change a Trust?

Successor trustees to revocable living trusts are required to abide by the trust documents. These documents control when and how distributions are made, and to whom. Within that framework, trustees have significant power to make decisions about investments, the sale or use of trust assets, and, in the case of incentive trusts, whether beneficiaries have met their obligations to receive distributions.

Generally speaking, a successor trustee does not have the authority to change a trust. Once you, the grantor, die, your revocable living trust will become irrevocable. Your successor trustee must work within the framework given. However, a trustee or beneficiary can ask the Florida probate court for clarification if the trust documents are vague. Also, if a surviving spouse becomes a successor trustee, he or she can sometimes retain authority to amend a trust to add or remove beneficiaries in limited circumstances.

Considerations When Choosing a Trustee

Your successor trustee is going to be the one managing your assets and working with your beneficiaries after you are gone. It is important to choose someone, or more than one person, that you can trust to fairly and impartially handle your affairs. Before automatically selecting your closest friend or oldest child, make sure you consider:

• Age: Is your trustee old enough to manage your affairs if you die tomorrow, but young enough that they are likely to outlive you?
• Loyalty: Do you trust your trustee with your personal information and family’s interests?
• Impartiality: Is your trustee able to consider issues objectively, and avoid favoring one beneficiary over another?
• Financial skills: Does your trustee have the knowledge and skill to manage your finances, maintain a detailed accounting, and put your assets to work producing income?
• Tax savvy: Is your trustee able to work with a CPA or accountant to prepare and pay your trust’s taxes, while minimizing the amount owed?
• Communication skills: Is your trustee able to clearly communicate with your beneficiaries about complicated financial details and sometimes emotional issues?
• Family history: Is your chosen beneficiary a “black sheep” or do they have trouble working with or speaking to your beneficiaries?
• Fidelity: Can you trust your trustee to keep your interests and their own separate, maintain separate books, and avoid conflicts of interest?

Get Help Planning for Your Family’s Future

There is an art to choosing the right successor trustee to oversee your family’s affairs. At Harrison Estate Law, we can help you choose the right person for the job, and create or amend your revocable living trust to include your selections, and clearly explain your wishes for your assets and your beneficiaries. Please contact us online or via email or call 352-559-9828 to schedule a free consultation. If you don’t live close to Gainesville we are happy to set up a phone or Zoom call.