San Diego Estate Planning Lawyer Blog
Choosing a successor trustee for your revocable living trust is an important decision. The choice of the individual or entity who will manage your assets, possibly invest your assets, ensure that the provisions of your trust are carried out after your death with the appropriate distributions to your beneficiaries is arguably one of the most important estate planning decisions you will make. Choosing a successor trustee that is not right for the job can lead to tension between the trustee and beneficiaries, breach of trust by the trustee, or costly trust litigation.
There are several options for a successor trustee. Probably the most common choice is a member of your family. Usually parents make their children the successor trustees of their trust. One thing to keep in mind is the relationship between the proposed trustee and the beneficiaries. Is there already discord or strained relationships among your children that could worsen if one were chosen over the others? Are some of your children better equipped to handle trust administration than others? Think carefully about making your children co-trustees, particulary if you have more than 2 children. For example, 4 children having to agree on aspects of trust administration because they are all trustees could be a recipe for disaster. In some families, 2 co-trustees or even more would be fine. The main consideration is whether the individual has the skills, experience, time, and demeanor to carry out your wishes. It goes without saying that trustworthiness and honesty is also important, maybe even more so than any particular experience with managing money.
Another choice is to name a trusted friend or financial advisor to be your successor trustee. Maybe your children have busy lives and you want to reduce the burden on them or avoid family discord. A trusted friend might be a good choice, however there are also circumstances where friends or a financial advisor or even a family member does not carry out his fiducariary duty of being a trustee and utilizes trust assets for their own benefit.
A third alternative is to name a corporate trustee. This is usually a bank or trust company that is in the business of managing trusts. They have extensive experience in investing assets and managing a trust in compliance with the law. They are also bonded and you have the ability to recover any losses from the bond or from the corporation’s assets. Corporate trustees charge a fee however, usually a percentage of the value of the trust assets they are managing.
Lastly, consider a private professional fiduciary. Such a fiduciary is in the business of managing trusts and is licensed and bonded. This alternative is a good choice for clients who have no children or family members they prefer or for clients who just want some neutral individual to administer the trust. In California, private professional fiduciaries are licensed by the State and most belong the the Professional Fiduciaries Association of California.
Our estate planning lawyers at Scott C. Soady, A Professional Corporation can assist you with choosing the successor trustee that is right for your trust.