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What is a Successor Trustee Form?

Successor Trustee forms

Taking care of your assets is a complex process, and forming a trust is one way to ensure your money will go where you intend it. Sadly the Successor Trustee Form is all too often overlooked. It is absolutely vital to have a Successor when you pass away. Just as an executor of your will handles the dispensation of your personal property, this vital individual will handle matters for your trust. We'll walk you through the form and any other relevant paperwork to help you make sure someone is there to take care of matters when you can no longer do so yourself.

Choosing a Successor Trustee

Before you fill out a Successor Trustee Form, it's essential to determine who you will be handing this duty to when the original Trustee passes away. Often people choose a relative or trusted friend; however, there are other options. If you have a lawyer on retainer, it may be wise to elect them as your ST. The most important thing is to choose someone who will deal scrupulously with your money. After your death, the ST will be able to move funds or even cancel the trust if they wish. While you are the Trustee, the power remains with you, but your new ST will essentially inherit that position. When selecting a capable individual, it is wise to run a background check. Look for any questionable court cases or charges involving debts, failure to pay, theft, or other money matters. Choosing to hand control of a large sum of money to anyone should be a well-considered and researched event. Especially when you are not handing the position to a person you know, this step is even more important. However, you should consider running such checks even when you feel you already know the future Trustee.

To Pay or Not to Pay

Your Successor Trustee can be a volunteer or a paid individual. Depending on the circumstances, it is important to decide which is most appropriate. For example, when it is a spouse or child, you may not want or need to compensate them for their time. Meanwhile, when you choose a professional to handle the issue; instead, it makes sense to pay them for the job they are doing on your behalf. Engaging a professional is hardly the same as asking your best friend to take over if something happens to you. Ensure you check the applicable laws where you live, as the compensation rates may vary from one state to the next. There's nothing wrong with being generous. Bear in mind that there may be upward limits to the pay scale as well as minimums.

When Does a Successor Trustee Take Over

Naturally, if the person who handles the trust passes away, then the Successor Trustee takes over. This ensures a smooth transition for the trust and helps make sure payees continue to receive what is theirs under the terms. However, there are other circumstances when your ST may assume duties. According to Law Insider, when a current Trustee is removed or ceases acting on behalf of the trust in any vital manner a new successor can be appointed. This must be stated in writing and accepted by the elected ST. A notice must be given to the previous Trustee if applicable. The incumbent ST should deliver this in writing in such instances.

However, when a company fails to provide an ST, it may fall to the court to appoint a capable individual. Thus, if the current Trustee refuses to do the job, is found incompetent, quits, or retires, then a new Successor Trustee must be assigned. If you don't designate someone acceptable, a court of law may do so for you once you cease to do the job. Regrettably, that means the court-appointee and not a person of your choosing now has the power over the trust. To avoid the above scenario, it is vital to make sure you have already assigned a new Successor Trustee to the position. That's where this form becomes important. Once this is completed, it is much harder, though not impossible, to change who is responsible for the trust.

Do You Need a Successor Trustee

Not all trusts require a backup Trustee. The difference is primarily important based on whether the trust is irrevocable or a revocable living trust. Irrevocable trusts tend to be more restrictive than their revocable counterparts. That said, each trust is uniquely written, and it is important to read it and carefully determine the requirements. Regardless of necessity, it is wise to choose and establish your ST when you create the trust or take over the position. While there are some circumstances where this might not be appropriate, it is more likely that you need a Successor. If you're concerned about the issue, speak to a lawyer and have them look at the trust paperwork.

Paperwork for a Successor Trustee

It is not a lengthy process to create, fill out, or file a Successor Trustee Form. Most people prefer to use a prefabricated version or one created by their lawyer. Fortunately, it is a simple document. You will need the address, phone number, and full legal name of the Successor. If they receive a stipend, then you should also include a social security number for tax purposes. You will need a notary public. Additionally, if you are a co-trustee or there are other grantors, you will need them present to sign as well. Since these individuals share responsibility for the Trust, they must approve the new ST as well. A Successor Trustee Form is merely an amendment to the trust. Doing this allows the new (future) ST to be added without drawing up an entirely new trust. Hence, the amendment gets added to the end of the original document.

You must sign the amendment before a notary public for it to be valid. The amendment needs a date and statement at the top that clearly indicates that the amendment exists to name an ST. The form should explain exactly who will take over upon the death or incapacity of the current trustee(s) with the information you collected, such as their name and address mentioned above. If you plan to pay the new Successor, this must be noted. Furthermore, the form should include a statement that says the amendment supersedes any similar information noted within the original trust document. Finally, you will need to attach this to the original. Copies of the amended trust should go to all banks and brokerages that handle the assets. You may also wish to file this document with an attorney if the trust has a dedicated individual or firm. Once this is complete, you've appointed the Successor Trustee.

Final Thoughts

Choosing someone to handle you, or your companies' money should never be done carelessly. A Successor Trustee is in a position of extreme trust, and they should always be both willing and capable to handle the task with the utmost professionalism. While the paperwork is straightforward, the election process is vital to the future security of the trust.

Allen Lee

Written by Allen Lee

Allen Lee is a Toronto-based freelance writer who studied business in school but has since turned to other pursuits. He spends more time than is perhaps wise with his eyes fixed on a screen either reading history books, keeping up with international news, or playing the latest releases on the Steam platform, which serve as the subject matter for much of his writing output. Currently, Lee is practicing the smidgen of Chinese that he picked up while visiting the Chinese mainland in hopes of someday being able to read certain historical texts in their original language.

Read more posts by Allen Lee

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