When a trustee passes away or becomes incapacitated, a successor trustee must step forward. In addition to the trustee’s duties, a successor trustee is responsible for presenting an affidavit or certificate of trust that provides proof of their legal power over the trust. The successor trustee must also keep records of income received, expenses paid, and in some cases they may need to open bank accounts and file fiduciary income tax returns. If the successor trustee takes over after the death of the grantor/trustee of a revocable living trust, he or she must obtain a tax identification number from the IRS.
The successor trustee will take over the responsibilities of the former trustee. The trustee’s duties include:
- Locating and protecting trust assets
- Ensuring compliance with trust terms and laws
- Preserve confidentiality of trust terms
- Act impartially and prudently
- Provide accounting reports to beneficiaries, if required
- And more
However, depending on the type of trust the trustee is acting under, additional duties may be required. Every trust has distribution rules the trustee must follow. For example, if the trust is a Supplemental Needs Trust, the trustee will need current knowledge of how the beneficiary’s eligibility for public benefit programs will be affected by trust distributions. In this particular type of trust, the trustee has the authority to decide if and when these distributions will be made to the beneficiary.
In some situations the successor trustee may not want to serve, be incapacitated, or have passed away before the trust documents could be updated. To avoid such issues, Trust Protector powers in a trust are important. Trust Protectors typically have the authority to add and remove trustees, among many other powers. Action by a Trust Protector can avoid court delays and fees that would generally be required to remove or change a trustee.