Revocable Living Trusts are designed to serve a variety of functions, such as providing individuals with greater control over how their assets and property are handled in the event of incapacitation or death, while also sparing loved ones from having to deal with the costs and delays of probate court.
When a Revocable Living Trust is formed, the creator – also called a Trustmaker– can fund the trust with assets or property. Anything that is used to fund the trust is then considered property of the Revocable Living Trust. The Trustmaker no longer technically owns the trust assets and property as the ownership has been transferred to the trust and control over the assets is assumed by the Trustee – which, in most cases, is the Trustmaker.
However, the unique thing about a trust is that it can survive the incapacity and even death of the Trustmaker and Trustee. A person or persons are named in the trust to take over as Successor Trustee in the case that the original Trustee cannot, or even does not wish to, serve as the Trustee anymore. All control over the trust assets then moves to the Successor Trustee, who must abide by the terms and conditions of the trust.
Successor Trustees are typically the spouse or adult child of the Trustmaker/Trustee, though the Trustmaker can choose anyone whom they have confidence in to serve as Successor Trustee. Trusts usually include additional instructions on who should become an alternative Successor Trustee if the person named cannot or will not accept the position. There are many considerations to take into account when deciding who should serve as a Successor Trustee, including what the Successor Trustee’s health situation may be when it’s time to take over or if you want to name co-Trustees to make joint decisions. You must also consider what type of property or assets are in the trust: managing multiple investment accounts and real estate properties requires a different skill set than those needed to administer a few bank accounts and a house.
Another thing to keep in mind is that a Successor Trustee will likely have to operate during difficult moments, such as when the Trustee becomes medically incapacitated or even dies. This is why many people ultimately settle on a professional trustee or lawyer to serve as Successor Trustee. This way, emotional entanglements and family conflicts are more likely to be avoided and decisions made are made objectively. One potential drawback to having a professional trustee or lawyer serve as Successor Trustee is the fee charged for their services, which is often set as a small annual percentage (often one percent or slightly more) of the total trust assets. Just keep in mind that a professional trustee or lawyer has a level of expertise handling trusts and must uphold the same fiduciary duty as other Successor Trustees.
If you’d like more information about Revocable Living Trusts and Successor Trustees, or if you’d like to review your existing Revocable Living Trust with an experienced estate planning and elder law attorney, please set up an appointment at our law firm by calling (336) 378-1122.