From the Desk of Rafael Ruano, Managing Associate, Estate & Business Planning Division:
How to Pick the Perfect Successor Trustee
Selecting the person to take care of distributing your assets when you (and your spouse if you are married) are gone is one of the most important decisions to be made when setting up an estate plan. If you set up a living trust, the “successor trustee” is the person that will take care of things after you are gone. They will look to the trust to tell them who should receive the assets and when. The successor trustee will also have to handle administrative paperwork with banks, insurance companies, government agencies and real estate agents. Most importantly, the successor trustee will usually be asked to use their discretion in dividing up personal belongings, in making partial distributions to children, and in dealing with the kids, other beneficiaries, and the children’s guardian(s).
In short, the successor trustee’s job is vital to fully carry out and implement your plan. For most, picking someone to take on the responsibility down the road can be difficult. The most important factor to consider when naming a successor trustee is finding someone that you, and your spouse, can trust without reservation. This person will have tremendous responsibility, but will have a great deal of power and control as well. If you have reservations, you should definitely expand your search and try to find someone else.
My client’s tend to choose family with adult children and close relatives being the most popular choices. An important consideration when selecting among family members is the dynamics between the children (and other beneficiaries) and the successor trustee. If you are considering naming a sibling but he/she has strained relations with your kids, or simply lives elsewhere and rarely interacts with your children, then you need to take that into consideration.
Close friends are also commonly selected when children are too young and other factors make other family members poor choices. One factor to take into account when naming a non-family member as successor trustee is what, exactly, you are asking this individual to do for you. If you have young kids and your trust states that they are not to received their shares until they are 35 years old, then you need to realize that you are potentially asking your friend to oversee the investment and ongoing management and distributions of the trust for decades (should something happen to you and your spouse in the near future). While your friend may be willing to do this, the issue should be considered before naming them.
The issues raised above are only a few of the many that come up when making this decision. Although choosing a successor trustee is tough decision it should not keep you from setting up a plan, as the uncertainty will certainly make things even more difficult for your children and family.
To discuss this issue and others that come up in a comprehensive estate plan, please contact me at (888) 993-1600 or firstname.lastname@example.org