The duties of being a successor trustee will vary from trust to trust. But your role does not come into effect until the initial trustee becomes incapacitated or is deceased. In this article, we will go over some of the duties of being a successor trustee to give you a better idea of what may be required of you.
Information You Need Now
While the initial trustee is still acting you will not have any duties. However, there is some information you should be familiar with. First, ask the current trustee to give you a general summary of their trust documents. This includes an overview of their trust provisions, trust assets, and insurance policies. They should also inform you where they store their trust documentation and other important papers.
Duties if the Initial Trustee Becomes Incapacitated
The duties of being a successor trustee will be different if the initial trustee becomes incapacitated. First, you will need to acquire documentation from a doctor proving incapacity. Most financial institutions will require this documentation before they will give you access to any trust accounts. Once you have access, you will need to familiarize yourself with their finances. This includes determining what assets they have, where they are located, and their current values.
You will also need to find out if they have any income, where it comes from, how much it is, and when it is paid. Additionally, you will need to find out what expenses they have. Once you do this you should put together a budget to help you keep track of funds.
Once everything has been set up you will need to transact business to keep up on expenses and the care of the incapacitated individual. All money spent should be for the benefit of the incapacitated initial trustee, no one else. It is very important that you keep detailed records of all transactions you make.
Duties When the Initial Trustee is Deceased
When the initial trustee passes your duties will differ from those you have due to incapacitation. It is important to remember that the trust assets are not yours, you are simply caring for them on behalf of the beneficiaries. You cannot mix trust assets with your own and you cannot use trust assets for your benefit. It is important that you always follow the instructions in the trust documentation.
As the successor trustee, you should follow steps below upon the death of the initial trustee.
- Locate the trust assets
- Collect life insurance and annuity benefits on which the trust is the beneficiary
- If necessary, file probate documentation
- Obtain date of death values for trust assets, including real estate and business interests
- Identify creditors and pay off debts
- Prepare and file required income, trust, and estate tax returns
- Pay ongoing expenses for administering the trust
- Manage trust assets until it is time to distribute to beneficiaries
- Distribute trust assets to beneficiaries according to trust provisions
Caring for Your Duties of Being a Successor Trustee
Though you are ultimately responsible to the beneficiaries for wisely managing the trust assets, if the duties are too much for you, you can enlist help. A tax preparer, financial planner, investment advisor, and an attorney are some of the professionals whose services you may find useful.
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