What Is a Successor Trustee? Definition and Duties

Naming a successor trustee can help ensure your assets are distributed according to your wishes after you die.
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Naming a successor trustee is a key part of the estate planning process. It can help avoid major legal snags and ensure that your wishes are followed if your original trustee dies or becomes incapacitated.

What is a successor trustee?

A successor trustee is the person or institution in charge of managing a living trust if the original trustee dies or is unable to manage the trust. The trust creator (the grantor) designates the successor trustee and the successor trustee’s responsibilities in the original trust document.

Many people establish a trust to protect their assets, avoid the probate process and make sure their assets are distributed how and to whom they wish.

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What does it mean to be a successor trustee?

First, being a successor trustee means safeguarding the trust and distributing its assets and resources as the grantor outlined in the trust document

American Bar Association. Preserving a Trust. Accessed Oct 25, 2023.
.

Successor trustees have six key duties:

  1. Asset management. The successor trustee takes control of the trust's assets, which may include investments, real estate, bank accounts and other personal property. They are responsible for knowing the value of and managing these assets for the benefit of the trust beneficiaries

    American Bar Association. Guidelines for Individual Executors & Trustees. Accessed Oct 25, 2023.
    .

  2. Distribution of assets. The successor trustee, following the instructions outlined in the trust document, distributes assets to beneficiaries according to the grantor's wishes. This may involve distributing assets immediately or over a specified period of time.

  3. Settling debts and making financial decisions. The successor trustee must use the estate’s assets to pay any of the estate’s outstanding debts or bills at the time of the grantor’s death, as well as communicate with beneficiaries about any delays in payments. They must also make responsible financial decisions in the best interest of the trust and its beneficiaries, and they must avoid any financial conflicts of interest.

  4. Communication. The successor trustee tells the trust beneficiaries that the grantor has died or is incapacitated (if the beneficiaries aren't already aware) and keeps them informed about the trust's status, decisions and distributions.

  5. Tax compliance. The successor trustee must ensure that the trust complies with all tax obligations, including filing tax returns and paying any necessary taxes on time.

  6. Termination of the trust. When everything has been taken care of and the trust fulfills its purpose or it reaches its termination date, the successor trustee oversees the final distribution of assets and the formal closure of the trust.

How to appoint a successor trustee

To appoint a successor trustee, the grantor designates a trustee and/or successor trustee in the original trust documents when they create the trust.

Selecting a successor trustee takes careful consideration. They should have:

  • Solid financial knowledge. 

  • Legal, accounting or related business knowledge.

  • Good communication skills to keep family and beneficiaries informed.  

You also have the option of appointing a corporate fiduciary or trust company to fulfill the role, rather than an individual

American College of Trust and Estate Counsel. How to Choose Your Executor or Trustee. Accessed Oct 25, 2023.
.

Your chosen trustee or successor trustee must agree to take on the responsibility for it to become official. The grantor will meet with the successor trustee to review the trust in detail and ensure they understand their responsibilities. The grantor may have to provide information about the appointment to the state.

What is the difference between a successor trustee and a trustee?

The main difference between a successor trustee and a trustee is when they take on their roles managing the trust. A trustee is appointed and begins their duties when the trust is first created and while the grantor is still alive. A successor trustee is designated by the grantor to take over if the initial trustee is incapacitated or dies.

Their roles and duties are the same, the only difference is the timing. Successor trustees step in only when the need arises, ensuring the trust's continuity and proper administration.

Is a successor trustee the same as a beneficiary?

The main difference between a successor trustee and a beneficiary is their roles and responsibilities. Beneficiaries are named in the trust and entitled to receive benefits or assets from the trust. Successor trustees execute the trust document on behalf of the grantor and in service of the beneficiaries.

However, a grantor can appoint a beneficiary — especially a close family member — as a successor trustee in a living trust.

What is the difference between a successor trustee and an executor?

The main difference between a successor trustee and an executor is that a successor trustee primarily deals with long-term trust administration based on the specifics of the trust document. An executor handles all affairs of the deceased in the immediate term, including the distribution of assets as outlined in a will or according to legal guidelines in cases of intestacy (when there is no will).

Although there may be times when the roles of a successor trustee and executor overlap or the two must work together, these distinct roles operate in different legal situations and for different amounts of time.

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