If you create a living trust, you will usually need to nominate two or three people to serve as your "successor trustees" in the event you can no longer manage your own trust. Think of a successor trustee like a "vice president" and you are the "president." In most cases, you are the initial trustee of your own living trust. If you cannot serve, your successor trustees take over, in the order that you have selected them.
It is certainly acceptable to name more than one trustee. In fact, many people choose to name "co-trustees" in which case the trustees must generally serve together. Generally speaking, I advise clients to select one trustee at a time since too many "chefs in the kitchen" can cause unintended problems.
Being a trustee is a difficult job. You have to follow the rules of the living trust and act in the best interests of the beneficiaries. In some cases, the successor trustee may also be a beneficiary. Most people who are acting as the trustee of a trust have never done so before. You have to select people that you know will follow your rules as outlined in your living trust. Remember that a living trust generally has no court supervision. In fact, one of the reasons people create a living trust is to avoid the court system. So while a trustee doesn't have to act with court supervision, that doesn't mean they get to do whatever they want. There are still some general rules and protocols they need to follow. The California probate code outlines some of those rules and guidelines.
An estate planning attorney can help a successor trustee after the death of a loved one. How formal the process will be may depend on the family circumstances and other unique issues. Many trustees don't realize they can be personally liable if they breach their fiduciary duty to the beneficiaries. In some cases, if there is enough at stake, some trustees will choose to obtain insurance (yes, they sell insurance for trustees).
When we prepare an estate plan for our clients, we provide detailed instructions for the successor trustees to follow. Essentially, we tried to give them a step-by-step manual that assists them in resolving the living trust after the client passes away. At the very least, the trustees will have a checklist of things to review and consider. In some cases, not every action item will be applicable, but it's still nice to have such a checklist. We also ask our clients to bring their successor trustees (or at least their first pick) to their final meeting so we can brief them on the plan and what may be required of them. The successor trustee can also ask questions during that meeting.
The most important thing a successor trustee can do is NOT to act impulsively or start distributing all the assets immediately. The best thing to do is to be methodical and careful. A trustee's actions should be deliberate and done after consultation with an attorney. Even if the estate is very simple, we generally think it is a good idea to meet with the attorney to have an informational meeting. The attorney might be able to advise the successor trustee of issues he/she may never have considered. When it comes to resolving in the estate, sometimes a successor trustee might do something that cannot be fixed. As such, it is best to proceed carefully and thoughtfully. There is usually no tremendous rush to resolve the estate and consulting with legal and financial professionals is usually the best course of action.
After someone dies, there are things that need to be done. However, there are rarely any emergencies and seeking professional guidance is prudent. Don’t start distributing all the assets, moving money from one account to another, filling out claim forms etc. In some cases, you may actually do more harm than good by launching into “action mode” after someone dies. Some people spring into “action mode” after the loss of a loved one, and that is understandable. Instead of focusing on grieving, they "get down to business" and start handling the affairs of the estate without giving things any thought. In some cases, they might distribute assets to the wrong people, act unfairly to one beneficiary or another, not provide proper access to estate planning documents, etc. In other words, they act when they may not fully appreciate what they are doing.
I've had clients call me on the way to the funeral! They ask, "Rob, my dad died this morning...what should I be doing?" I always answer the same way, "Grieve for your dad. All your dad's accounts and affairs will be the same a few weeks from now. Let's get together in a couple of weeks and outline a plan." Hasty action can sometimes cause problems. Also, keep in mind that some married couples have trusts that may split into sub-trusts upon the first spouse’s death. Many surviving spouses forget about this issue. Therefore, seeking legal counsel is often the best thing to do. It's also a good idea to talk to financial professionals to make sure your post-death actions won't trigger negative tax consequences.
If you need assistance resolving an estate after someone's death, you can make an appointment with our office to discuss your situation. Call (661) 414-7100. Also, download our checklist from the "Get Started" page. You can also visit our videos page for helpful information.
If you are the trustee of a living trust, perhaps you are a bit overwhelmed by what to do when someone passes away. This video will give you an overview of what to do if you are the trustee of a living trust. It won't give you every single detail, but it will give you an excellent idea of what steps to take when handling the administration of a living trust. Take notes and make a checklist for yourself.
If you hire a lawyer to help you, then you will have a great idea of what's involved. Whatever you do, don't panic. If you take things step by step, you will get through the process. It might take a few weeks, a few months, or even longer, but if you have a plan of attack, you will eventually get through this.
A critical component to most living trusts is establishing who the successor Trustee is going to be. Sometimes, it is very difficult for people to choose two or three successor trustees (I usually like my clients to choose at least two alternates in the event their first choice is unable to serve). However, even if you know who your successor Trustees are going to be, you still need to outline a clear mechanism for succession in your living trust. In other words, how will we know when it's time for the successor trustee to serve? There are generally a handful of ways a successor trustee can step in and start handling your trust.
1) A common method is resignation. In other words, let's say you are the trustee but you can no longer handle your own affairs. You actually recognize that maybe it would be better if someone else handled your affairs. In that case, you can resign as trustee, and your successor Trustee steps in and handles your trust. The resignation can be accomplished by signing a formal resignation.
2) Death is also an easy way to establish succession. All your successor would need is your death certificate. Unfortunately, that can take weeks to get from the county, but it's a sure fire way to establish succession.
3) The last common way to establish succession is to establish "incapacity." Most trusts say that when a trustee becomes "incapacitated," the successors can step in and handle matters. However, the trick is how the document defines "incapacity." I have seen documents that call for two doctors' declarations under penalty of perjury, one of which must be the primary care physician. Some call for three doctors. Some say the beneficiaries can vote if someone is incapacitated. Sometimes this is very difficult to establish, especially when doctors are reluctant to sign such declarations (and they are often reluctant to do so for fear of litigation). In my living trusts, I usually require only one licensed physician's declaration to establish incapacity. Of course, I always make sure my clients are ok with this. It's much easier to handle things when only one doctor's declaration of incapacity is required. If you've chosen people you trust, why make it difficult for them to help you when the time comes?
Robert Mansour is a lawyer in Santa Clarita, CA. He handles wills, living trusts, and other estate planning matters for Santa Clarita and its communities of Valencia, Saugus, Canyon Country, Stevenson Ranch, Newhall, Castaic and beyond. Call (661) 414-7100 for a consultation.
After the death of a spouse, many clients call me and ask me what to do. While there are several things that can be done, there is usually no emergency. I tell the client to take a few weeks and grieve. Then they can call me to discuss any steps they should be taking.
One of the things I usually help my clients with is taking the deceased spouse off of title to the real estate. This is done by filing an "Affidavit of Death" with the county recorder's office. Also, you need to file a "Preliminary Change of Ownership Report" to keep the property taxes at the same level.
The affidavit puts the county recorder's office on notice that a spouse has passed away, and now only one person is in charge of the real estate. This is a simplification of the process, but that's essentially what you are doing with respect to real estate. Why would you take the spouse off the property? Well, if there is any chance the property would be sold in the future, then only one signature would be required (that of the surviving spouse).
Robert Mansour is a Santa Clarita, CA attorney who can help you protect yourself and your family with a solid estate plan. To learn more about estate planning, click here to watch an information video.
The "Trustee" is the person in charge of the Trust (if there is a living trust or other kind in effect), and the "Executor" is the person in charge of the will. In most cases, being the Trustee is the tougher job. An executor may have to go to court, but in most cases, the attorneys handle most probate-related matters. The Trustee on the other hand has to inventory all the assets and distribute them to sometimes disgruntled family members! Both jobs can be tough so make sure you select people who are willing and able to do this job.