Five Things to Consider When Selecting a Successor Trustee
One of the most important decisions in the estate planning process
is choosing the Successor Trustee. Since the early 1980's revocable living trusts have been utilized more and more as estate planning tools in California. A Successor Trustee is named in the Trust to assume the responsibility for administering the Trust when the person who set up the Trust (the Settlor) dies or becomes incapacitated. The Successor Trustee is responsible for settling the Trust according to State law. The person selected for this important role may become overwhelmed by the tremendous burden if they are unprepared or unqualified for the job. The following are five questions to consider when selecting a Successor Trustee:
1. Is the individual able to act independently in carrying out the wishes of the trustor in a manner in which the autonomy, values, beliefs, and preferences of the trustor are best protected? The trustee has a fiduciary relationship to the trustor to:
Exercise objectivity, the foundation of good decision making
Make well-reasoned decisions based on the trustor’s wishes
Ensure the wishes of the trustor with respect to family legacy
Act with the greatest degree of care and diligence
Represent only the interests of the trustor
Avoid conflicts of interest
Maintain the confidential nature of the trustor’s affairs
Protect the trustor’s rights in any manner necessary
2. Is the individual experienced in business, finance and accounting
matters, including.....?
Investment and management of assets
Real estate transactions and management
Legal asset title issues
Cash management and internal accounting controls
Accurate books and records for all income, principal and expenses
Preparation of periodic accountings for the beneficiaries and the court
Distribution of income and principal authorized by the Trust
Federal and state trust income tax returns
Proper termination and distribution of trust assets
3. Is the individual independent and able to administer the Trust
without conflicts of interest?
Equal loyalty to all beneficiaries
Independent discretion and decision making
No conflicts of interest
4. Does the individual have the time?
Not burdened by other obligations
Able to immediately act if Settlor dies or becomes incapacitated
Select an alternate trustee if successor trustee is unable to act
5. Is a family member the best choice?
May not be able to be objective
May not have the time
May have conflicts of interest
May not have business and finance experience
Probably does not have experience managing estates
May not be any available family members
Out-of-town family members won't know or have a local resources and other needed professionals
May be disputes or bad feelings between family members
