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What Is a Successor Trustee in Estate Planning

Living trust and estate planning document. A tax form is also included in the scene.

If you are new to estate planning in general or revocable living trusts in particular, you might just now be familiarizing yourself with the legal names for the parties involved in a typical trust, such as “Settlor,” “Trustee,” and “Beneficiary.” You might then be wondering what a “successor trustee” is and whether your trust needs one. The answer to that question is most likely yes. Below we explain a little about what a successor trustee is, what that person does, and the critical role they play in administering your trust. If you need help creating, amending or revoking a living trust or managing other essential estate planning documents in South Florida, contact Shalloway & Shalloway in West Palm Beach to discuss your needs with an experienced and dedicated Florida estate planning attorney.

What Is a Revocable Living Trust?

First off, a revocable living trust is a legal instrument that provides a vehicle for transferring ownership of your assets, including real and personal property, to another person or organization of your choosing after your passing. Utilizing a trust to distribute your estate rather than a will allows you to bypass the probate process and keep the details of your estate and estate plan from becoming a matter of public record. You can change or revoke a living trust at any time during your lifetime so that the terms of the trust are always consistent with your needs and desires.

As to legal terminology, the person who creates the trust or owns the property that is transferred to the trust is known as the settlor. The beneficiary is the person (or persons) who is set to receive the assets in the trust after the settlor’s passing or at a future time as established in the trust document. The trustee is the person who holds legal title to the assets in the trust and manages the trust for the benefit of the beneficiaries, eventually transferring title to the beneficiaries at the appropriate time. According to Florida law, the term “trustee” includes the original trustee as well as any successor trustee.

The Difference Between a Trustee and a Successor Trustee

As noted, a trustee is an individual or institution designated to manage and distribute a trust’s assets according to the terms laid out in the trust document. The trustee has a fiduciary duty to act in the best interest of the beneficiaries.

A successor trustee, on the other hand, is someone who takes over the management of the trust after the original trustee can no longer serve due to incapacity, death, or other reasons. Essentially, the successor trustee steps in to continue the trustee’s responsibilities when the latter is unable to.

It is quite common for a trust to name both an original trustee and a successor trustee. In many cases, the initial trustee is the settlor, who retains control over the trust as trustee and can manage the trust during his or her lifetime. The settlor-trustee might also be the initial beneficiary as well. However, to meet the goal of distributing the trust’s assets after the death of the settlor, the trust will need to name a successor trustee as well as additional beneficiaries. A settlor cannot, in fact, be the sole trustee and sole beneficiary of a trust under Florida law.

The Role of a Successor Trustee

Once activated (usually upon the death of the settlor-trustee), the successor trustee assumes all the responsibilities of a trustee, including:

  1. Distributing assets to beneficiaries as stipulated in the trust.
  2. Managing any investments within the trust.
  3. Filing tax returns for the trust.
  4. Making discretionary decisions where the trust allows.

In summary, the successor trustee has the responsibility to ensure that the terms of the trust are executed efficiently and legally.

Successor Trustee vs. Executor: What’s the Difference?

Both successor trustees and executors play vital roles in estate planning, but they are not the same. An executor is appointed through a will and is responsible for managing the estate as it goes through probate. The successor trustee, conversely, manages a trust, which often avoids the probate process altogether. While an executor’s role typically ends after the probate process is complete, a successor trustee’s duties can continue for as long as the trust exists.

Can a Successor Trustee Change a Trust or Remove a Beneficiary?

The ability of a successor trustee to modify a trust or remove a beneficiary is generally limited and governed by the terms of the trust document. In Florida, any such changes would usually require court approval or unanimous consent from all beneficiaries, unless the trust specifically grants the successor trustee such powers.

Typically a trust becomes irrevocable after the death of the settlor, which is when the successor trustee steps in. But if the trust is contested based on lack of capacity or undue influence on the settlor, the successor trustee might have the power to amend the trust. Some trusts also grant this ability by providing a successor trustee with power of appointment or specifically allowing a trustee such as a spouse to amend or revoke the trust after the settlor’s death.

Who Is the Best Person to Select to Be a Successor Trustee?

Choosing a successor trustee is a crucial decision. Consider the following factors:

  1. Trustworthiness: The person should have a history of making responsible decisions.
  2. Financial Acumen: Basic understanding of financial matters is helpful, although trustees are encouraged to work with legal and financial professionals as needed.
  3. Availability: The person should be available and willing to serve.
  4. Relationship with Beneficiaries: A good relationship can make the process smoother.

It may also be worth considering a professional entity like a law firm or bank to serve as trustee, especially for more complex trusts.

Contact Shalloway & Shalloway for All Your Estate Planning Needs

Understanding the role and responsibilities of a successor trustee is crucial for effective estate planning. Whether you are setting up a new trust or revisiting an existing one, the team at Shalloway & Shalloway is here to guide you through every step of the process. Call our West Palm Beach law office at 561-686-6200 for all of your estate planning needs.

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