What are the circumstances in which a successor trustee takes over trust administration?
A trust agreement is one of the most important tools in a typical estate plan. If you decide to include a trust in your estate plan, then you will need a Trustee. To help you understand why appointing a successor trustee is important, the Indianapolis attorneys at Frank & Kraft explain under what circumstances a successor Trustee might take over the administration of a trust. What is a trust?
A Trust is a legal agreement which allows the person who created the agreement (the “Settlor”) to appoint the Trustee. The Trustee will manage and protect the assets for the benefit of a third party. A trust can either be a testamentary or living trust. A living trust is activated while the Settlor lives, whereas a Testamentary Trust is activated after the Settlor has died by a provision of the Settlor’s Last Will and Testament. A trust can also be revocable or irrevocable.
What Does a Trustee Do?
The job of a Trustee is to manage the trust assets and administer the trust agreement using the provision in the trust agreement. The trust provisions are created by the Settlor, and the specifics of a Trustee’s job will be heavily influenced by those provisions. In general, however, a Trustee is responsible for guarding and investing trust assets, communicating with trust beneficiaries, keeping trust records and paying taxes owed by the trust, and distributing assets to the trust beneficiaries according to the terms of the trust agreement.
When Might a Successor Trustee Take Over Administration of a Trust?
A successor Trustee is just that – a successor. The successor Trustee will take over the administration of a trust if the appointed Trustee cannot or does not want to serve as Trustee and a successor was appointed in the agreement. Common reasons for a successor Trustee to take over include:
Refusal to serve
- . The appointed Trustee is under no legal obligation to accept the appointment, meaning he/she can turn down the job, leaving the successor Trustee as the next in line for the job of Trustee.Death of Trustee
- . If the trust is a testamentary trust and the acting trustee dies, then the successor Trustee assumes the position of Trustee. Sometimes, when the trust is a testamentary trust, the original Trustee predeceases the activation of the trust, effectively moving the successor Trustee up to Trustee.Incapacity of Trustee
- . Incapacity of Trustee. If you become incapacitated, control of your assets seamlessly passes to your chosen successor Trustee immediately and without the need for judicial approval or oversight.
What Happens If I Do Not Appoint a Successor Trustee?
When you create a trust you have the ability to name a successor Trustee and/or name the process for choosing a Trustee should one be needed in the future. If you create a revocable trust, you can always amend the trust agreement to include an alternative or successor Trustee. For more information, join us at an upcoming FREE seminar. If you have any questions or concerns regarding when a successor trustee might take over the trust administration, please contact the experienced Indianapolis attorneys at
Frank & Kraft
, by calling (317) 684-1100, to schedule an appointment. Mr. Kraft’s primary areas of expertise are estate planning, Medicaid planning, federal, state, and corporate taxation, as well as real estate and corporate law. He also brings an accounting background to the table. Latest Posts by Paul A. Kraft Estate Planning Attorney (see all)
