Being named as someone else’s Successor Trustee is an honor. But it can also feel overwhelming, especially when it happens after the death of a loved one. Most people step into this role with little warning and no real training, all while still grieving. Nonetheless, there’s an important job to do.
If that’s where you are right now, take a breath. You don’t need to have everything figured out right this second. We’ve written this article to give you a basic understanding of what a Successor Trustee does, where to start, and what mistakes to avoid, without burying you in legal jargon.
Think of this as an abbreviated roadmap. While it’s not legal advice for your specific situation, this is a way for you to get oriented.
For our purposes, we will refer to Revocable Trusts. With these Trusts, the goal is often probate avoidance. With Revocable Trusts, a person (the Settlor) forms a Trust by executing a Trust Agreement. He or she then transfers assets into the Trust by assigning them or retitling to the Trust.
After the Settlor dies, someone has to take over and carry out his or her wishes. That’s the Successor Trustee.
What Is a Successor Trustee?
A Successor Trustee is the person (or institution) named in a Trust to take over management of the Trust when the original Trustee can no longer serve. This is most often because of death or incapacity.
Once the Trust becomes irrevocable (which typically happens at death), the Successor Trustee needs to take over the Trust’s administration. This means that your role, as the Successor Trustee, changes substantially from what you may have been doing before:
- You are no longer following the settlor’s personal wishes informally
- You are now acting in a fiduciary capacity and have legal responsibilities toward the Beneficiaries of the Trust
- Your actions must strictly follow the terms of the Trust and applicable law
At this point, the Trust is no longer belongs to someone else. It is a legal entity for which you are responsible.
Think of this position like an Executor of someone’s estate. With a Will, the person named as Executor must go to the probate court to receive Letters Testamentary.
But with a Trust, the Trust Agreement’s terms state how to handle assets and who will pick things up. This does not require going to court, which is a huge benefit of a Living Trust.
Step One: Confirm That You Are Actually the Successor Trustee
Before doing anything else, confirm that you are actually the Successor Trustee. That usually means reviewing:
- The Trust Agreement and Certification of Trust
- Any amendments to the Trust
- Any required conditions for succession (such as a written acceptance)
In many cases, need a Certification of Trust to prove your authority to financial institutions. This is a short summary of the Trust and will document your authority to act as Successor Trustee. You may also have to provide a death certificate. Do not assume institutions will simply take your word for it.
Gather Key Documents Early
Trust administration becomes much harder when documents are scattered or incomplete. As early as possible, locate:
- The complete Trust agreement and any amendments
- Death certificate(s)
- Financial statements for Trust assets and non-Trust assets
- Deeds, titles, and insurance policies
- Contact information for beneficiaries and professional advisors
This step alone can take time. That’s totally normal. But don’t sit around on this. You need to take action promptly.
Understand Your Core Duties as Successor Trustee
Many first-time Trustees are surprised to learn that good intentions are not enough. The law imposes real duties on Trustees, regardless of experience. This includes:
- Duty to Administer: You must take up the responsibilities placed on you in a timely manner, and continue serving until the Trust terminates or someone else takes over as Trustee.
- Collect Trust Property: One of your early responsibilities is to determine what the Trust owns and ensure those assets are properly titled and protected.
- Duty of Loyalty: You must act in the best interests of the Beneficiaries, not yourself.
- Duty of Impartiality: You must not favor one Beneficiary over another if there are multiple Beneficiaries of a Trust.
- Duty of Prudence: You must manage Trust assets responsibly, which includes making appropriate investment decisions and managing risk (subject to any waivers that may be in the Trust Agreement).
- Duty to Inform and Report: Beneficiaries are typically entitled to notice that the Trust has become irrevocable, information about their interests, and periodic accounting of Trust activity.
State law, both court cases and statutes, describes these duties in detail. It is incumbent on you to carry out all duties the law imposes. The Trust Agreement may modify some standards, but you still must carry out your job diligently.
Successor Trustees Should Pay Debts, Expenses, and Taxes Carefully
Trust administration is not just about distributions to the Beneficiaries. You may be responsible for:
- Funeral, burial, and other final expenses
- Paying outstanding debts
- Ongoing property expenses, like maintenance and insurance
- Final income taxes for the Decedent and Trust tax filings
Distributing assets too early, before these types of obligations are known, can expose you to personal liability.
Distributions: Slow Is Often Smart
Many Trusts require specific timing or conditions before the Trustee can make distributions. Others give the Trustee wide discretion in how to distribute. Either way, it is unwise to make distributions hastily. A careful Trustee:
- Confirms all debts and taxes are addressed before any Beneficiary receives a distribution
- Understands each Beneficiary’s interest
- Documents decisions thoroughly
Moving too fast is one of the most common mistakes Successor Trustees make. If there are outstanding tax or creditor issues and because of quick distribution those are not handled properly, the Trustee could be personally liable.
You Are Allowed (and Encouraged) to Get Professional Help
Serving as Trustee does not mean you must do everything alone. In fact, getting professional help is often the most responsible choice. Trustees commonly work with:
- Trust and estate attorneys
- CPAs
- Financial advisors
Reasonable professional fees are typically expenses of administration paid from the Trust’s assets. You do not need to pay these from your own pocket.
While some Beneficiaries may push back against these professional fees, having professionals working with you protects against avoidable accusations that you did not do your job properly.
When Trust Administration Goes Sideways
Even well-intentioned Trustees can run into problems, especially when:
- Beneficiaries disagree
- Family dynamics are strained
- The Trust’s terms are unclear
- Business or real estate assets are involved
But early guidance often prevents disputes that later turn into litigation. If you see things going wrong, or a Beneficiary is accusing you of wrongdoing, it’s critical to get help immediately. Failing to mitigate the damage can make things much worse.
Final Thoughts on Serving as Successor Trustee
If you are named as a Successor Trustee, you may not have signed up for this. Perhaps it’s a total surprise to you. But, if you’re willing to take it on, you can handle it with the right support and information.
Trust administration is a process, not a single decision. Taking it step by step, and getting advice early can protect you, honor your loved one’s wishes, and reduce conflict along the way.
If you’re serving, or about to serve, as a Successor Trustee of a Tennessee Trust and want clarity about your responsibilities, we can help. Contact Connell Law, PLLC to schedule a consultation and get practical guidance for your situation.
