Why You Need an Attorney to Help When You Become the Successor Trustee

Why You Need an Attorney to Help When You Become the Successor Trustee

A successor trustee plays a critical role in the estate planning process by carrying out the wishes of the deceased. As the one named in the trust, they assume control of the estate after the trustee dies or becomes incapacitated, and are entrusted to manage the assets, pay outstanding debts, and transfer the assets to the designated beneficiaries. 

If you have assumed the role of successor trustee, it's important to contact an Orange County estate planning attorney to determine what your next steps should be. 

Let's examine the responsibilities of a successor trustee and when you need the services of a trust attorney. 

The Duties of a Successor Trustee

If you have been named the successor trustee for someone's trust, you may be wondering just what your duties are and whether you are up to the task. Both of those questions are important considerations, as the responsibilities associated with this role are many. 

When the grantor (the person or couple who set up the trust) becomes incapacitated or dies, you, as the successor trustee, take over as the manager of the trust. This means that you are responsible for the assets, which may include investing them in a way that maximizes growth while minimizing risks. 

In that case, you'll need to evaluate the assets held within the trust, as well as the income and expenses. Some additional responsibilities may possibly include ensuring final tax returns are filed, collecting death benefits, and distributing the assets to the beneficiaries. 

As soon as your duties begin, it is important to immediately consider consulting with an Orange County estate planning attorney

For further clarification, the following represent typical scenarios often benefit from an attorney's assistance:  

An Asset Was Left Out of the Trust

A trust is a document similar in most respects to a contract designed to hold valuables and provide instructions for their distribution. The valuables are assets of the estate. However, if the owner acquired assets after creating the trust and failed to add them to the trust, a probate judge may be required to determine rightful distribution. In this case, the 

The best way to stay out of court and reduce expenses and taxes is by ensuring the trust is fully funded and that all beneficiary designations have been updated. After assuming the role of successor trustee, should you discover that some assets have not been funded to the trust,  you will need an estate planning attorney in Orange County to sort out the details. 

The Trust Contains A/B Trust Planning

It's difficult enough to manage a simple revocable trust. Add the A/B trust into the mix makes acquiring the services of an estate planning lawyer in Orange County a necessity. 

In order to help married couples, and avoid additional estate taxes, estate planning attorneys often set up A/B trusts where upon the death of the first spouse, the trust splits and part of it becomes irrevocable. 

For blended families with children from different marriages, an A/B trust can protect the beneficiaries and the distribution of assets to them after the death of one of the spouses. It is quite likely that if you are a successor trustee dealing with an A/B trust, you will need the counsel of an estate planning lawyer Orange County CA.

A Beneficiary's Inheritance Is Held in the Trust

Whether due to specific instructions or the beneficiary being too young to receive their inheritance, dealing with assets held in a trust can raise complications. A trust may mandate certain distributions, such as income, over the life of a trust or lifetime of a person. 

It is a successor trustee's responsibility to implement the terms of the trust and manage the assets carefully.  Understanding your role as successor trustee, and reviewing the key provisions with an estate attorney is vital.

The Estate Owes Taxes

If a successor trustee distributes assets to the beneficiaries before paying taxes, they may be held financially responsible should the trust not have the funds or assets to pay the taxes in full. If you, as a successor trustee are uncertain if taxes need to be paid, consult with an Orange County estate planning lawyer to make sure the appropriate tax returns are filed and paid.

The Grantor Owned a Business

As a successor trustee, you are responsible for all the assets placed in the trust. When a business interest is held in a trust, the successor trustee is then responsible for continuing to operate the business, shutting it down, or possibly selling it. Diversifying the trust's investments is one of the trustee's duties, which means that many opt to sell.

For families wishing to keep their company, some trusts establish an investment advisor who oversees all business interests and has authority to conduct an ongoing business. This person then becomes responsible for the retention or sale of business assets according to the trust, and the trustee must follow their instructions. 

Another possible scenario is that the trust named a business person as co-trustee, one who manages the business interests along with the primary trustee. 

If an advisor or co-trustee has not been named, the trustee may delegate responsibility for the business to a carefully chosen third-party. The bottom line: if a business is held in a trust and you are the successor trustee, it's time to contact an estate planning lawyer in Orange County.  

The Trust Is Named as the Beneficiary of an IRA

There are some reasons to name a trust as an IRA beneficiary, such as when the intended beneficiary is a minor and unable to legally own the IRA, or a second marriage or blended family creates the need to protect the interests of the children of the grantor. 

In this instance, the required minimum distribution can benefit the spouse and then pass over to the grantor's children upon their passing.

Even if an individual is named as the beneficiary of an IRA, an attorney's services include counseling the successor trustee on the handling of the retirement assets and the possible tax ramifications.

Family Trouble

Unfortunately, the internet is awash with stories about families fighting over an inheritance. Money and emotionally-tied family heirlooms seem to bring out the worst in people with tension and distrust replacing thoughtful consideration. 

So, what happens when the family members don't agree with how the successor trustee is handling the estate and distributing the assets? In these instances, a trustee's best option is to obtain the services of an Orange County estate planning attorney.

Manage Your Successor Duties With Ease

Because of the many legal ramifications, some grantors opt to name a trust lawyer to handle the many tasks of a successor trustee. Having a disinterested third party managing the estate assets can result in less family tension and worry.

Whether to name a trust attorney as a successor trustee, or retain the services of a trust lawyer when you find yourself in the role, we at Parker Law Offices are here to support you. Call us for a free consultation today.

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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