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Trustee Succession Provisions


What Happens When a Trustee Dies?

Establishing a trust can be an effective way to transfer assets to your loved ones upon your death while also saving on taxes and protecting your family’s privacy. So, what exactly happens to the trust when you, the trustee, die? Let’s take a look.

What happens when the grantor trustee passes away?

“Grantor trustee” refers to the individual(s) who established the trust. If you had established a joint revocable trust with your spouse, the management of the trust will seamlessly transfer to your spouse as the surviving grantor trustee. No specific action is required.

If you had established an individual revocable trust or were operating as the surviving grantor trustee of a joint trust following the death of your spouse, your death would be considered a triggering event. At this point, the successor trustee appointed in the trust agreement would become responsible for administering and distributing your assets in accordance with the provisions of the trust document.

What are the responsibilities of a successor trustee?

The successor trustee is responsible for following the terms of the trust agreement. The successor trustee will likely need to:

  • Request tax identification numbers – Following the death of the last grantor trustee, the revocable trust becomes irrevocable. The successor trustee must then request a federal tax identification or employer identification number. In some states, a state identification number is also necessary.
  • Take Inventory, then safeguard and value trust assets – The successor trustee is responsible for understanding what assets are part of the trust, arranging for any necessary appraisals and keeping assets safe.
  • Pay taxes – The successor trustee will need to pay any necessary income or estate taxes owed by the trust.
  • Pay debts and expenses – Most trust agreements provide provisions to pay for the grantor trustee’s final expenses and outstanding debts, and the successor trustee is responsible for coordinating these payments.
  • Distribute trust assets – Once he or she has a clear understanding of the assets associated with the trust and has paid all outstanding expenses, the successor trustee is responsible for distributing the remaining assets to the trust’s beneficiaries. If the trust provides for the long-term care of any beneficiaries, such as minor children, the successor trustee is responsible for overseeing the ongoing payments in accordance with the trust agreement.

What happens when the successor trustee passes away?

In many cases, a trust document will identify more than one level of successor trustee. If the original successor trustee dies (or resigns) while administering the trust, the next successor trustee will take control of the trust. If the trust does not appoint a second successor trustee, it may specify who has authority to name a successor. If neither of these individuals are named in the trust document, state law determines who will serve as the next successor trustee.

At Creative Planning Legal, we work with clients to implement custom estate planning solutions that help protect their families and leave a lasting legacy for the people and causes that matter most. If you’d like help with your estate planning, or with any other financial matter, please schedule a call.

This commentary is provided for general information purposes only, should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.


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