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The Duties and Liabilities of Being a Successor Trustee

The Duties and Liabilities of Being a Successor Trustee

Setting up a revocable living trust with your Orange County estate planning attorney is an excellent way to avoid probate and reduce the financial strain on friends and family.  

The process involves naming one or more people, or sometimes a corporate trustee, to act on the settlor's (also known as the grantor or creator) behalf upon incapacitation or death. The person bearing this responsibility is called the successor trustee.  

What Is a Successor Trustee?

The successor trustee, as the name implies, "succeeds" the trustee, usually the person who creates the trust, following their incapacity or death. In essence, they assume responsibility for managing the trust and its assets when the creator can no longer manage the trust themself. 

What Are the Duties of a Successor Trustee?

The duties of a successor trustee vary, depending on many factors, and are usually detailed in the trust document. Some of these duties include instructions for what to do  if the creator has become mentally or physcially incapacitated or has passed away, and what to do if they have minor children. Let's take a look at what these different scenarios mean. 

What Does a Successor Trustee Need To Know After Agreeing To the Role?

After agreeing to the role of a successor trustee, you should become familiar with the trust and the conditions stated within it. Find out where the trust is kept, along with any insurance documents. Go over the beneficiaries with the grantor to ensure they contain the appropriate designations. It's also a good idea to have an estate planning attorney in Orange County review the trust and corresponding documents on an annual basis, or when there has been a change in the family or assets. 

In addition, determine if you are the sole successor trustee or if you will be acting with someone else.  

What Are the Successor's Responsibilities if the Grantor Is Incapacitated? 

If prepared correctly, the trust should contain instructions for how to determine whether the grantor is no longer capable of handling their financial affairs. Usually, one or more doctors are required to certify that, due to physical or mental disabilities, the grantor is incapacitated and can no longer handle their financial affairs. This document may be requested by banks and other institutions. 

Once legally determined, a successor trustee's role is as follows: 

  • Contact the estate planning lawyer in Orange County to review the trust. It's essential that the successor trustee understands the documents to determine their responsibilities if they have not already done so.
  • Ensure quality care for the grantor. Review their insurance and become familiar with the benefits and what, if any, long term care is covered.
  • Make sure their healthcare providers have received the medical power of attorney and living will.
  • Notify the person named under the health care power of attorney.
  • Contact the guardian of any minor children. If no guardian is named, or if the courts have determined that the designated legal guardian is incapable of caring for the children, the court will select a guardian. 
  • Apply for disability benefits.
  • Examine and manage finances including assets, income, and expenses. 

What Are the Successor's Responsibilities if the Grantor Dies?

The successor trustee's responsibilities include distributing assets and property held in the trust and transferring titles according to the trust agreement. The role changes dramatically if minor children are involved, or if the trust is going to exist for a number of years after the death of the creator. 

If there are children or individuals that will not receive their inheritance until after they reach a certain age or fulfill a specific agreement, the trustee must protect the inheritance, and assets, until the time they can be distributed to the beneficiaries.  

The responsibilities assumed once the grantor passes away are as follows: 

  • Check the trust for specific details regarding the creator's funeral instructions and contact the family.
  • Appraise the value of the trust's assets. Do not take any action, such as distributing or selling assets, until meeting with the Orange County estate planning lawyer
  • Pay tax liabilities and creditor debts.
  • Collect life insurance policies and retirement accounts if the trust is the beneficiary.
  • Invest, manage, and protect the assets until it's time to distribute them to the beneficiaries. 
  • Distribute money accordingly to the beneficiaries until all assets are distributed.
  • Keep careful financial records in order to prepare a final accounting for the beneficiaries showing all income and expenses of the trust administration.
  • Set aside a reserve fund for any trailing expenses.
  • Determine estate or income tax liabilities and file taxes. 

If money is needed to pay off tax liabilities or debts, the trustee may need to sell some existing assets. Be sure to consult with the estate planning attorney in Orange County before placing any assets up for sale. 

Handling Your Role as a Successor Trustee

As is evident from this list, the responsibilities of a trustee are numerous and can last for years. If you feel overwhelmed as a trustee, you can hand over the duties to a successor trustee, if one has been named. If there is no successor trustee, contact the estate planning attorney Orange County CA to determine alternative solutions. 

At  Parker Law Offices, we understand the importance of a well prepared estate plan and are dedicated to preparing the appropriate documents required to keep a family's assets out of probate and up to date with current laws. 

We are committed to making this already trying time a little easier. Call us today for a complimentary consultation.

Maria Parker assists her clients plan for their end of life health care wishes and the ultimate distribution of their wealth after death. She personally experienced the importance of planning at the time her father passed away.

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