How to Choose a Successor Trustee
Perhaps you have a simple estate consisting of your home, a single-family residence, a rental home, three bank accounts and a three-year-old car. That would not be too complicated to handle among your three children, assuming they all get along and you have designated in your trust that each will receive one-third after taxes, if any, are paid. This would be a no-brainer.
But let's assume your holdings are far more and include proportional interests in businesses, shopping centers and developments, as well as shared ownerships including leases and stipulation agreements that keep your estate from making independent decisions to sell or refinance. Or let's assume you have stipulated to maintain an ongoing investment strategy.
Are there multiple beneficiaries? Are there nonprofits receiving financial benefits or property? Are there insurance policies? Are there gifts that were made prior to death and are factored into the intended division of proceeds? Or loans that come due at various times, possibly with prepayment penalties?
Some revocable living trusts are complex or may be designed to benefit heirs for many years to come. If you anticipate that your trust will endure for many years, it might be to everyone's benefit to choose a trust company or bank as your successor trustee. Those institutions are equipped to provide long-term administration, and they generally offer high levels of accountability and oversight. In addition, corporate fiduciaries have the following qualities:
-- They are competent to handle finances and will follow the trust instructions.
-- They have the time and interest to take on the role.
-- They will avoid family conflict by being unbiased and unemotional when making decisions.
-- They won't die or become incapacitated.
-- They act objectively when following instructions.
-- They keep detailed records and have estate administration, tax and investment expertise.