Being a Successor Trustee comes with a number of responsibilities. In most cases, you'll expect to fulfill these duties when the Grantor (the person who created the Trust) eventually passes away. However, you may need to step into this role earlier if the Grantor were to become incapacitated. It's a sensitive time that can be overwhelming, but your role is critical in ensuring the Trust's objectives are met.
In this article, we'll explain what your duties as Successor Trustee will look like specifically in the event of the Grantor's incapacitation. You'll find a comprehensive list of your responsibilities, with a helpful explanation of each. Use this guide as your roadmap to navigate your duties with confidence, with the incapacitated Grantor's wishes always at top-of-mind.
How does a Successor Trustee take over when Trustee is incapacitated?
A Grantor who sets up a Living Trust typically appoints themself as the Trustee. That way, they can control and manage Trust assets and distributions during their lifetime and so long as they are mentally sound. For the rest of this guide, make the assumption that the Grantor is also the Trustee of the Trust.
When the Grantor of a Trust becomes incapacitated, it triggers a process that leads to the Successor Trustee assuming responsibility. The first step involves determining incapacitation, which is typically defined in the Trust document itself. Often, this requires certification from one or more physicians who attest to the Grantor's inability to manage their own affairs.
One common requirement is a letter or certificate of incapacity from a primary physician. Some Trusts may even require a second opinion from additional physicians. These certifications establish the medical basis of the incapacity, which is crucial in triggering the Successor's role. The process ensures that the Grantor's condition genuinely warrants the Successor Trustee to intervene, thereby protecting the Grantor's autonomy.
Once the incapacitation is officially established, the Successor Trustee will gather these certificates, the Trust document, and any other relevant legal documents such as Power of Attorney. This collection of documents will serve as evidence of the Successor Trustee's authority to act as the Grantor's proxy. When dealing with financial institutions and other parties, these documents will often be required as proof.
From this point forward, the Successor Trustee is legally enabled to manage the Trust's assets. The main objective is to always act in the best interest of the Grantor and their Beneficiaries. This includes preserving if not increasing the value of the Trust's assets. Specific duties may include paying bills, managing investments, and making sure taxes are filed on time.
Successor Trustee duties if the Grantor becomes incapacitated
As a Successor Trustee, stepping in when the Grantor becomes incapacitated can feel like a daunting responsibility. Understanding your duties in this situation is key to successfully fulfilling your role while prioritizing the Grantor's best interests.
Here, we've broken down these duties into a clear, actionable list:
Communicate with relevant parties: Keep beneficiaries and other related parties in the loop about the Grantor's health status and how the Trust is being managed. Honest and open communication will help maintain trust and avoid misunderstandings.
Manage the day-to-day affairs: This includes paying the Grantor's bills, managing their investments, and taking care of any other financial or personal tasks the Grantor would usually handle. The Trustee must be careful to continue managing these affairs in a way that aligns with the Grantor's established patterns and wishes.
Make medical decisions: If the Power of Attorney document allows for it, the Successor Trustee may need to make decisions regarding the Grantor's healthcare.
Record keeping: Maintain meticulous records of all transactions and decisions made. This is essential for transparency and also for the annual account the Successor Trustee must provide to the beneficiaries and the court.
Filing taxes: The Successor Trustee must ensure that the personal income tax returns of the Grantor, and potentially the Trust's tax returns, are filed on time.
Preserve the Trust's assets: The Successor Trustee should ensure the Trust's assets are protected and preserved. This might involve managing investments or property within the Trust.
Be prepared for court supervision: In some cases, a court may require supervision of the Trust's management. The Successor Trustee should be prepared for this possibility and should always manage the Trust's affairs in a way that would withstand court scrutiny.
Specify your wishes with the help of Trust & Will
This article has provided comprehensive insight into the duties of a Successor Trustee, specifically in the context of when the Grantor becomes incapacitated but is still alive.
These responsibilities include communicating with the Beneficiaries and other key parties, managing the Grantor's affairs, making medical decisions (if authorized), keeping records, filing taxes, and preserving the Trust's assets, among others. By understanding these duties, a Successor Trustee can better navigate this demanding role, ensuring the Grantor's wishes are honored, the Trust's assets are safeguarded, and all legal obligations are met.
Creating your own Trust is an empowering step. The general public usually associates estate planning with something that goes into effect after one's passing, but they often don't realize that they also serve as a method of protection during your lifetime as well. If you ever became incapacitated and couldn't provide instructions, your wishes can still be known and carried out. It provides a comprehensive plan for your wealth distribution, care of dependents, and specific end-of-life decisions. By carefully specifying all aspects of your care and estate distribution, you can maintain control, mitigate family conflicts, and ease the transition process for your loved ones.
Start the journey of creating your personalized Trust today with Trust & Will. Our platform is designed to simplify the process, offering guidance every step of the way. From setting up your Will to establishing your Trust, we're here to help. Visit us here to take our quiz and get matched with an estate plan that's right for you. It just takes a few moments to begin the process and ensure your wishes are translated into a legally binding document. Don't leave anything to chance -- take control of your future today!
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