One of the ways that we help our clients is with our trust services. Recently, I was thinking about the significance of who is named as successor trustee in the case of a trust-based state plan.
Consider this hypothetical example: Elaine owns a couple of rental homes and an investment account. Her trust names her daughter, Lisa, as successor trustee if Elaine becomes incapacitated and can no longer manage her own affairs. Lisa knows her mother well, but she lives in another state and works full-time.
During a routine review of her estate plan, Elaine and Lisa were talking through what that appointment would involve. Lisa would need to find property records, address tenant and insurance matters, coordinate with advisers, pay ongoing expenses, and make funds available for Elaine’s care. Lisa wants to help her mother, but managing those tasks from a distance would be difficult.
Elaine asks her estate planning attorney about naming a corporate trustee to handle the trust’s administration if needed, while Lisa remains involved in her mother’s care.
Their conversation raises a question worth asking when creating a trust: will the person or institution you name be ready for the work the trust will require?
The Work of a Successor Trustee
Serving as successor trustee involves more than distributing assets. The work varies with the trust, but may include:
- Taking inventory, valuing, and collecting trust assets
- Protecting property, maintaining insurance, and arranging needed repairs
- Planning for cash needs, investments, and ongoing expenses
- Working with legal and tax advisers on filings and other requirements
- Reviewing distribution requests under the trust’s terms
- Explaining decisions and providing information to beneficiaries in a timely manner
- Documenting transactions and preparing reports
For a family member who has been appointed to serve, these duties often begin during a period of illness or loss of a loved one and continue alongside that person’s job and family responsibilities.
How a Corporate Trustee Can Help
A corporate trustee is a bank or trust company authorized to administer trusts. Its support can take several forms, depending on what the trust and family need:
- A defined process
A corporate trustee can review the trust terms, identify the assets, and organize the steps needed to begin administration. That gives the family a clearer picture of who is responsible for what.
- Clear communication
Beneficiaries may have questions long before a trust is ready to make final distributions. A professional team can provide reports, explain its decisions, and keep people informed as the work progresses.
- Judgment outside family roles
Investment and distribution decisions sometimes affect relatives differently. A corporate trustee can consider those requests under the trust’s terms without also being a parent, sibling, or beneficiary in the conversation.
- Support for continuing work
Property, investments, records, and tax matters do not always fit into a short settlement period. A corporate trustee has staff and systems to coordinate those responsibilities over time.
- Continuity for the trust
The organization can continue to serve and can provide continuity when an individual is no longer able or willing to serve. That continuity can matter when a trust is expected to operate for many years.
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Choosing a successor trustee is an essential part of a trust-based estate plan. It is more than just putting a name in a document, as we saw in Elaine’s situation. It is a decision about how your wishes within the trust will be protected, investments managed, and the terms implemented when someone must act.
Who have you chosen to take on that responsibility for you and your family? Think about the assets involved, the people who will rely on the trust, and the time and judgment the role will require. Then talk with the person or institution you are considering before the need arises for them to serve.
If you are creating or reviewing your trust, we would welcome a conversation about whether a corporate trustee is the right fit for you. We seek to provide guidance that will always be in our clients’ best interests and provide a range of services to help you carry out your plan effectively and ensure your peace of mind.
