What are a Successor Trustee’s Duties?

Creating a trust is a popular estate planning tool, particularly when it comes to a living trust.  Here is a quick rundown on how a living trust works:

• A living trust is a legal arrangement in which a person, called the grantor, shifts ownership of property, such as stock, a home, real estate or bank accounts, from their ownership into the legal ownership of the trust.
• A trustee manages the trust’s assets according to the terms of the trust agreement. The trustee can be the grantor, a friend or family member or a corporate entity.  As the initial trustee, the grantor can maintain full control of the trust until his or her death or incapacity. When the grantor relinquishes the trustee role, a successor trustee takes over the trustee duties. The successor trustee has legal responsibility for administering the trust solely for its named beneficiaries.

So what does a successor trustee do when they take over a living trust when the grantor passes away?  Some of the first steps to take are to protect the assets:

• Valuable property should be secured, such as in a safe deposit box.
• Accounts at financial institutions should be transferred into a federally-insured account for the trust.
• The trust should have its own tax identification number.
• If property such as a residence, needs maintenance and repair, it is the trustee’s duty to see that this is done, paid for with the trust’s assets.
• Proceeds from life insurance and other death benefits are payable to the designated beneficiary. If the trust is the designated beneficiary, claim forms should be completed, and submitted as soon as possible.
• Credit cards issued in the deceased’s name should be cut, and the pieces should be returned to the issuer with a request to cancel the account. If there is a joint account holder, advise each credit card company of the date of the death and let it know that the surviving account holder will be solely responsible for any charges.
• Trust assets should be insured against claims. Make sure existing policies continue after the deceased’s death or take out new policies.

Taking on trustee duties is a big responsibility, but one that does not need to be done alone.  A trustee can hire professionals to assist in administering the trust, and those fees are paid for with trust assets.