If you’re asked to serve as the successor trustee of someone’s living trust—or worse, you find out only after the person’s death that you’ve been named as successor trustee—you have a choice to make. You’re not legally required to take on this responsibility. You can decline, and let the next person in line take over.
It’s usually a good idea to take a little time to consider your options before you agree to take on a job that can entail a great deal of responsibility and last for months. Here are some questions you may want to ask yourself before you make your decision.
Like an executor, a successor trustee is in charge of wrapping up a deceased person’s financial affairs. The trustee gathers trust property, keeps it safe, and eventually distributes it to the beneficiaries named in the trust document - most likely a common living trust. But before that can happen, the trustee may also need to file tax returns, pay creditors, and get assets appraised.
If you think this could take a lot of time, you’re right. If you honestly don’t have the time to do a good job with the paperwork, phone calls, emails, and calls to lawyers that may be required, you may want to turn down the job. You won’t be doing anyone a favor if you agree to this obligation but then don’t give it the attention it needs.
On the other hand, wrapping up a simple living trust shouldn’t take too long, and along the way you can get help from tax experts, lawyers, and others (and pay for it from trust assets). You should be able to do a good job if you are careful, honest, and patient.
If conflict is already simmering among the trust beneficiaries, or you think it will soon bubble up, think twice before you say "yes." You could easily wind up in the middle of feuding family members—and they may turn on you if they think (or imagine) that you’re playing favorites. It can make your job much more difficult and unpleasant.
Similarly, think about your own relationship with the beneficiaries and with the executor of the estate. If you find it extremely difficult to deal with certain beneficiaries, you might not be the best person for the job of trustee. You’ll also need to cooperate closely with the executor, because you may have overlapping legal responsibility when it comes to matters like taxes and creditors.
If you have been appointed along with a co-trustee, that’s another red flag, unless it’s someone you know you can work well with and rely on to pull his or her weight. Having more than one trustee generally complicates matters because in most situations (it depends on what the trust document says), you must both agree on every action taken on behalf of the trust.
The difficulty of your job will depend in large part on how well (or how poorly) the deceased person was organized when it came to financial and legal matters. Do you know what the deceased person owned, and if not, will it be tough to find out? If you aren’t familiar with the person’s assets, you could end up spending a huge amount of time tracking down assets that are supposed to be held in the trust—but in fact may not be.
Most people, of course, don’t really want to serve as a trustee. Accepting the position adds another obligation to our busy lives and thrusts us into what to most people is an unfamiliar world of legal, financial, and tax matters. And of course there’s always a strict legal code of ethics when you’re handling other people’s money; a trustee must be scrupulously honest and avoid anything that even looks like unfairness.
Why, then, do so many people accept what is both an honor and obligation? They do it because it is a last favor for someone they loved—someone who trusted them with this responsibility. For many people, that is reason enough. If you feel duty-bound to accept, don’t worry too much about the potential problems.