Successor trustees fulfill one of the most important jobs with a living trust: managing assets when the initial trustees are no longer able.

If the trustor has named him/herself the initial trustee and the trustor/trustee is incapacitated or unable to act, the successor trustee steps in to act similar to a financial power of attorney for assets in the living trust.

When the trustor/initial trustee passes, the successor trustee acts in the same manner as an executor. The successor trustee acquires death certificates, inventories the estate, settles debts and disputes, prepares tax returns and ultimately distributes the estate to beneficiaries.

In some cases, the successor trustee’s job may last long after the trustor passes if the trust’s instructions require assets to be temporarily withheld from young beneficiaries or be held as a life estate for a person named in the trust.

Successor Trustee Compensation

Successor trustees can choose to be compensated and are typically limited to the same amounts a personal representative can charge for services during probate:

• 4% of the first $100,000
• 3% of the second $100,000
• 2% of the next $800,000
• · 1%of the next $9,000,000
• 0.5% of the next $15,000,000

Picking Successor Trustees

Your successor trustees may continue working with the trustor’s financial advisors and other professionals. Hence, successor trustees do not need to be financial geniuses. Successor trustees act in a fiduciary manner, which means they can be legally held responsible for their actions if not in the best interests of the current beneficiaries (who initially are the trustors while living).

It is important to record all transactions as a successor trustee should a beneficiary take issue with the successor trustee’s activities. Hence, successor trustees could be viewed more like bookkeepers. Successor trustees are often allowed by living trusts to hire a professional bookkeeper or accountant to assist with the record keeping.

Some people choose to name family members as successor trustees while others choose professional corporate trustees. Family members may be in a better position to make decisions during certain situations compared to a corporate trustee, such as early distribution requests by young beneficiaries.

However, a corporate trustee may be able to deal with troublesome beneficiaries and often has more experience with record keeping and procedures associated with managing an estate. An experienced estate planning attorney can help you determine which is best for your estate.