Jessica Graham is meeting with her estate attorney to learn more about her role as the successor trustee for her father, John’s, revocable living trust. Jessica has been a partner in her father’s marketing business since she earned her MBA five years ago. John inherited money from his parents, which he has invested very well over his lifetime. He and his wife, Marie, also own a business and a family home. The couple has two daughters, Jessica and Janet. Jessica was named the co-trustee of John’s trust when she graduated. She has served as co-trustee with her father for the last year, but his recent untimely passing has resulted in her being the successor trustee before she was ready.
What is a revocable living trust?
Let’s consider each of these words in turn. A trust is a legal relationship between the person who funds the trust (grantor) and the trustee who has a fiduciary duty to manage the assets, properties, and accounts in the trust to benefit the grantor and the beneficiaries. A living trust is set up by the grantor and is in effect through their lifetime, during any period of disability, and after death. Since the grantor can change the trust instructions or end the trust altogether at any time during their lifetime, the trust is revocable.
What is a successor trustee?
John has been managing his trust throughout his lifetime. Therefore, he has served as both the grantor and the trustee. After Jessica finished her degree and started working with him in his marketing business, John named Jessica his co-trustee and subsequently as his successor trustee.
John held the role of trustee for as long as he wanted so that he could control the accounts and property in his trust. When he was ready, he turned this control over to his daughter. He could have held the role of trustee until he was disabled or dead and had his successor take over at that point, but John wanted to have Jessica manage the trust while he was alive so he could provide guidance.
What are the responsibilities of a successor trustee?
John chose his daughter Jessica as his successor trustee because he knew she would follow the trust terms and purposes and act in good faith. The trust benefits multiple family members, including Janet and Marie, and charities. Jessica must administer the trust in the beneficiaries’ best interests unless the court or the beneficiaries consent to another action. Although Jessica may have favorites among the beneficiaries of the trust, she must remain impartial. Finally, she is responsible for protecting the trust assets by securing all physical property in the trust against damage and loss. To do so, Jessica will need to notify the relevant financial institutions that she has the authority to take these actions.
What are the duties of a successor trustee?
Jessica manages, invests, and distributes the trust benefits to the beneficiaries. As the trustee, now that John has passed, Jessica has gathered the following documents before meeting with her estate attorney.
- John’s estate planning documents: These documents will verify that Jessica has the authority to make decisions regarding the assets in the trust.
- Other important documents: Insurance policies, real estate deeds, car titles, bank and investment account statements, and tax returns to ensure that all property and accounts are included in the plan.
Jessica and her estate attorney will plan a strategy for administering the trust and ensure she has the legal documents needed to carry out that plan. Jessica will create the following lists:
- Debts, creditors, and current expenses so she can ensure that all John’s bills are paid.
- Trust beneficiaries and heirs-at-law and their contact information so Jessica and her estate attorney can determine what each beneficiary is entitled to receive and how they will be notified.
- A list of all John’s property, accounts, jewelry, and other valuables so Jessica can verify how much each is worth and adequately protect them from loss or damage.
- In case Jessica needs to defend her actions, she will keep a record of all expenses, deposits, and transfers of money and property into and out of the estate.
Jessica has sought help from her estate attorney to ensure that she is correctly navigating through the trust administration process. John had arranged for this meeting in advance, as he knew Jessica might feel overwhelmed with the responsibilities and need the help of someone with more specialized skills in this area. The trust financed the services of the trust attorney.
If you find yourself in the trustee role, we can help you navigate the necessary tasks and answer any of your questions.
You can schedule a call with us or reach us directly at 855.631.3457 to learn more about how best to plan today to protect those most important to you.