The choice of who will be trustee of your living trust after you is one of the most important decisions you can make in your estate planning. There are several factors you will want to consider when selecting your successor trustee.
A Texas estate planning attorney can create your living trust and other estate planning documents and help you evaluate who should be your successor trustee.
The Role of a Trustee
In most revocable living trusts, the person who creates the trust is usually the trustee during their lifetime. The role of successor trustee becomes relevant when the original trustee becomes incapacitated due to a severe injury or illness or the original trustee dies. At either of those two points, the successor trustee steps up into the role of the trustee.
Let’s say that you have a revocable living trust and you become incapacitated because of Alzheimer’s disease years after setting up the trust. Your successor trustee will manage the assets of the trust on your behalf. Your financial future is in their hands. You want to make sure that the person you choose as your successor trustee can and will perform their responsibilities competently.
One day, when you pass on, your successor trustee will be the person who is supposed to follow the instructions contained in the trust for management and distribution of the assets. You will not be there to look over their shoulder, to make sure that they honor your wishes.
The Inescapable Element of Trust
Unlike a will, a living trust does not get filed in the courts. There will not be a judge overseeing the actions of the trustee. The trustee should follow Texas law about keeping the beneficiaries informed of their actions and providing annual reports and accountings to the beneficiaries. In reality, few trustees follow these rules unless they are professionals.
Sometimes, the trustee does not know what their duties are, and other times, they know but simply do not bother. Because some non-professional trustees play things close to the vest, the beneficiaries never receive what they are supposed to get under the terms of your trust, and they never find out what they should have received.
To avoid this outcome, you should consider either naming a professional like a bank trust department or a trust company as your successor trustee. Another option is to choose someone whom you trust implicitly and have your estate planning lawyer include instructions about the duties of the trustee when they take over for you.
Red Flags to Watch for in a Successor Trustee
Many people make the mistake of naming their oldest or favorite adult child as their trustee, without considering the person’s money management skills or whether the individual will honor the instructions of the trust. Here are some things to be concerned about when considering who to name as your successor trustee:
- Whether the individual has the intelligence, including financial savvy, to manage your assets well. They are unlikely to manage your money better than they manage their own.
- Whether the individual has any life situations that might make it tempting for them to “borrow” the trust assets for themselves, like an issue with gambling or addiction.
- Whether the person has strong convictions about religion or other life choices that might cause them to disregard, rather than honor your wishes.
You can work with a Texas estate planning attorney to set up your living trust and choose one or more successor trustees. Get in touch with our office today for help with your case, we gladly offer a free consultation.