I was speaking with a couple recently and their question was about picking a trustee for their revocable living trust. As you can imagine, this is a very common question that many of my clients have. This couple wanted the trust to live on after their death to provide funds for the college education of their grandchildren. As I discuss with every family, picking the correct trustee for your revocable living trust is a very important decision.
When the revocable living trust terminates at the death of the husband and wife that settled the trust, this is not a big deal. In this case, the husband and wife couple are simply using the revocable trust to avoid probate, and upon the death of the surviving spouse, all the family assets will simply pass very quickly and easily to the surviving family members, usually their children.
However, when a family wants the trust to survive their death, such as to provide protection from divorce and creditor claims, to prevent their children from spending through their inheritance, or planning for children with special needs just to name a few, it is even more important to have a serious discussion with your family and your estate planning lawyer on who will be the successor trustee after you are gone.
When you make the decision to pick a successor trustee to manage your trust assets after you are gone, there are three important issues to keep in mind:
- Is The Successor Trustee Someone You Can Trust?
- The successor trustee is almost always a family member, so this is not usually an issue for most families.
- Is the Successor Trustee Going to Also be a Primary Beneficiary?
- If the successor trustee is going to be a primary beneficiary then this is a discussion you should also have with the other primary beneficiaries. The last thing you would want is to select a successor trustee that would lead to disagreements with the other primary beneficiaries. This is the type of the disagreement that could wind up in court to resolve the disagreement.
- Should a Trust Company Be Used?
- In certain circumstances, a trust company may need to be consulted and used as the successor trustee in these circumstances. For any number of reasons, a family member may not be comfortable being a successor trustee with their family members and siblings constantly asking him or her for their share of the trust assets. In addition, if the successor trustee mismanages the assets or distributes assets to an overbearing family member, it can result in personal liability for the successor trustee. Therefore, in these situations, a trust company may want to be consulted and considered when picking the successor trustee.
I routinely help families have the discussion and ultimately make the decision of picking a successor trustee to manage the trust assets after their death. This is a decision that should only be made after careful consideration and consultation with your family and an experienced estate planning lawyer.
If you have questions about estate planning, irrevocable and revocable living trusts, and avoiding nursing home expenses, please reach out to me before you go see any other lawyer or make any other decision on your estate planning so I can send you our free legal report “Estate Planning in Tennessee,” which goes over all the common questions about probate in Tennessee, Medicaid, nursing home expenses, and protecting your assets for your loved ones.
Also, if you would like to learn more about estate planning, avoiding nursing home poverty, and avoiding probate in an educational environment, please reserve a spot at one of our upcoming live educational events or webinars that we have scheduled this month.