If you or a loved one is experiencing a significant period of disability, chances are you have heard the term “successor trustee.” If you are not yet in a position to have heard this term, it’s important to understand it before you need to.
Successor Trustee Definition
By definition, a successor trustee is someone who manages a trust after the trustee passes or is disabled/incapacitated in some way. When a trust is created, the individual who creates it (also known as the grantor) is generally his or her own trustee, responsible for managing the trust’s assets. But, the individual may appoint a second person to be his or her successor, to manage the assets when he or she (as the grantor) is no longer able to do so effectively.
During a period of illness or following the death of the grantor, the successor takes over the management of the trust. He or she is granted some of the same rights as the original grantor and can make purchase, sale and investment decisions for the assets remaining in the trust so long as the original purpose is carried out.
It’s important to note that the trustee cannot use the trust’s assets to his or her own benefit unless designated as the beneficiary as well as the successor. Additionally, details of the trust cannot be changed during the grantor’s life, likewise it becomes irrevocable following the grantor’s death, which means changes to the purpose of the trust cannot be made (to ensure the wishes of the grantor are carried out).
Choosing a successor trustee is one of the most important financial decisions you will make. While many individuals choose friends or family members, others use professionals who charge a fee for the administration of a trust because of their level of expertise. If no successor is named, a court may have the right to appoint a trustee. Because of this, it’s important to make the decision on your own, before it’s too late.
If you are looking to make changes to your trust, to appoint a trustee, or are in the position of having been named a successor trustee, it’s important to work with an estate planning professional to be sure all wishes are carried out appropriately.
Cherewka Law has extensive estate planning experience and is able to answer any questions you may have during the creation (or administration) of a trust. Contact us today to learn more.