A Minneapolis Estate Planning Lawyer Defines a Successor Trustee and Explains Why You Should Have One
You did everything right. You sat down with a lawyer, paid her to draft your estate plan, created a living trust and named each other as trustees. But, the unthinkable happened and your spouse died before you did. You were so sure it would be you first. Your lawyer now explains that you are the successor trustee and that you must now administer your spouse's trust. What does she mean by a successor trustee?
When creating a revocable living trust, you (the trustmaker) will name yourself as trustee of your trust. But, what happens if you can't act as your own trustee either due to death or incapacity? Who will step in and manage your trust on your behalf? You need a backup. Spouses/partners will generally name each other as backups. What happens when one of them dies first?
You will need to check the trust document to make sure your spouse named a backup trustee. If not, check the will (if there is one) as it is common that the successor trustee is also named as the executor. Although the role of executor is similar to that of trustee, there are technical differences. If there was a will, you should consult with a Minnesota probate attorney to determine if a court probate process will be required to administer the estate.
If all assets were titled in the trust prior to the person’s death, or passed by beneficiary designation, such as in the case of life insurance and retirement plan assets (such as 401ks, IRAs, etc.), then a court probate may not be needed. However, if there were accounts or real estate in the person’s name alone that were not covered by the trust, a court probate may be necessary.
During the probate process, all of the deceased person’s assets must be collected and accounted for. This includes all bank accounts, stocks, bonds, mutual funds, investment accounts, retirement assets, life insurance, cars, personal belongings and real estate. All of these assets should be valued and listed on one or more inventories. Depending upon the value of the assets, an estate tax return may be needed. You should be aware of any final expenses, the person’s final income tax returns, and any creditors. Although this process is lengthy, once all of the appropriate steps are taken, the assets will be distributed and the estate will come to a close.
Even without the need for probate, you are now the trustee and, as such, are in charge of all of the assets in the trust. If the person had a will stating that their assets should all be put into trust after death, you are also responsible for working to retitle all assets into the trust. You are then obligated to distribute those assets according to the terms of the trust so will need to be extremely familiar with the trust document in order to ensure that you follow it's instructions. In accepting the job as trustee, you signed on to faithfully follow the trust document and the law in carrying out your duties. This can be a complex, and confusing, job.
It is important that you hire a wills, trusts and estates attorney to assist you in carrying out your duties. Although the attorney that originally created the estate plan would most likely be more familiar with the situation, you are not legally required to hire that same attorney. You can hire any attorney that you please in order to determine what your obligations are.
If you have been named a successor trustee, an experienced estate planning attorney can help you through this process and make sure you carry out your legal duties as required. Contact us for a consultation today.