A revocable living trust is a means to pass assets to heirs without going through probate court proceedings. If you are the creator of the living trust (“trustor”), choosing a trustee is usually easy—you pick yourself, so that you have complete control over your trust estate during your lifetime. If trustors are husband and wife, it is common for them to name themselves as co-trustees. If one dies, the survivor acts as sole trustee, but usually with only limited power to make any changes to the terms of the trust.
But whom do you pick to be “successor trustee” if the last trustor is ill and cannot manage the assets? Or whom do you pick to manage the assets at the death of the final person who created the trust? The successor trustee manages the trust estate and makes sure it is distributed to all beneficiaries. Beneficiaries may be family members, other named individuals, or a charity.
Under California law, any adult may be a trustee, even a non-resident of California or the U.S. Typically, trustors choose one of their beneficiaries to act as successor trustee, but a bank or trust company may also be named. If you choose a family member, such as one of your children, you need to be sure that person has the intelligence and ability to handle trust property with integrity, so you are confident that each of the beneficiaries will receive their proper share.
Sometimes trustors who have two or more children believe that one will be offended if not named as a co-trustee. But if multiple parties are to be co-trustees, they must agree completely on all decisions concerning the estate. If ever there is a disagreement, they may have to end up in court for resolution. As a general rule, it is preferable to name only one successor trustee. The second, or third, may be named as “alternates” in case the first-named is unable to carry out the duties.
Suppose you don’t have any children? Now your choice of successor trustee may be some other family member, a good friend, or it may be a corporate trustee. Most banks have trust departments that will act in this capacity, but often require that trust assets be valued at more than some amount, such as $1 million. There are also firms that specialize in trust administration services. Frequently your tax accountant or financial advisor can recommend a firm. While family members sometimes don’t charge to act as trustee, or only charge for out-of-pocket expenses, corporate trustees will charge the trust estate with a monthly fee for their services.
A corporate trustee might be a good idea if you expect there will be squabbling among the beneficiaries, or if management of trust assets is likely to be unusually complex.
As in all legal matters, it is a good idea to consult with an estate attorney who is experienced in trusts before making a final decision.
Note: The Senior Resource Services (SRS) office hours for drop-in assistance are Monday, Wednesday, and Friday from 10 a.m. to noon. The SRS office is in the Cribari Center across from the Post Office. You may also leave a message at 408-239-5253 or e-mail SRS at villagessrs@sbcglobal.net. The web site is www.thevillagesgcc.com/srs. The purpose of SRS is to provide education and general business and financial information. All assistance is free and confidential. You should ask your professional advisor about your individual situation.
