Proven Partners For Financial Health

How should you choose a successor trustee?

On Behalf of | Aug 27, 2023 | Estate Planning

Many adults who are drafting estate planning documents in Michigan consider adding a trust to their strategy. Trusts can shield people from taxes, protect assets from creditors, help people qualify for Medicaid and prevent beneficiaries from misusing inherited assets. There are many different kinds of trusts, some of which people fund at the time of their death. Others require establishment and funding prior to their death. People who want creditor protection and Medicaid planning benefits, for example often fund a trust while still alive.

The person putting together the estate plan may be the initial trustee, and they control the assets in the trust until their death or incapacitation. At that point, the person they named as their successor trustee will need to take over those responsibilities. How does someone choose the right person to act as their successor trustee?

Consider age

Obviously, choosing someone older than the testator or the same age as them to serve as a successor trustee could be a gamble. They could very well die first or experience incapacitation due to age at roughly the same time as the testator, thereby preventing them from stepping into that role. Choosing someone young enough to manage the trust when someone dies or requires support from someone they know because of age-related challenges will be of the utmost importance.

Consider personal abilities and ethics

Not everyone has the organizational skills to manage an estate. It can be very challenging for someone who struggles with habitual tardiness or who mismanages their own finances to properly administer a trust. Additionally, although a trustee has a fiduciary duty to act in the best interests of the trust’s beneficiaries, including the person who creates the trust, not everyone will fulfill that obligation appropriately. Some people cannot resist the temptation of having access to valuable resources and might engage in misconduct, like embezzlement, for their personal benefit.

Ideally, a testator will know someone who is young, trustworthy and competent enough to manage the challenges of trust administration on their behalf successfully. Naming the right successor trustee can potentially be as important of an estate planning step as properly funding a trust initially.