Estate Planning Successor Trustee

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					              New Dimensions
                 in Estate & Trust Planning
                               An Article to Benefit Clients & Friends
                                                 of




          Trust & Estate Planning  Probate & Estate Administration  Business Formation & Planning



              ROLE OF THE SUCCESSOR TRUSTEE
                                                     in
                           The Revocable Living Trust

     During our Firm's initial planning                   determined who the Successor Trustee will be,
conference with clients, this question is often           as well as the parameters of their authority, so
asked, "What is the role of my Back-up                    decisions can be made privately—without court
(Successor) Trustee upon my disability or                 or guardianship proceedings.
death?" This excellent question is answered                    In fact, one of the significant benefits of
either during the first (initial) conference or at        the Revocable Living Trust over other Estate
our Presentation/ Signing Conference.                     Planning documents (wills or testamentary
     The Successor Trusteeship begins when                trusts) is the importance of this disability
you—the Trustmaker—can no longer serve as                 protection to Trustmakers and the "Peace of
your own Trustee, either upon your disability             Mind" it brings with it. For instance, not only
or death. Let's examine each event.                       does the Trust contain important disability or
                                                          incapacity instructions for the Successor
ROLE OF THE DISABILITY TRUSTEE                            Trustee, the RLT is also interfaced with the
                                                          Trustmaker's Health Care Power of Attorney
     When a Revocable Living Trust (RLT) is               and Living Will. In short, the RLT manages
established, the Trustmaker will always name              and safeguards the Trustmaker's assets while
in the Trust document an individual(s) (for               the Medical Health Care documents provide for
example, the spouse or other family member)               the Trustmaker's health care decisions.
or a corporate Trustee (bank or trust company)            Usually, the Trustee and the agent (for health
to serve as the Back-up Disability Trustee. In            care) are the same parties, except where the
our RLT, Article Four contains all the                    Trustmaker has a corporate trustee serving in
important Trustee instructions and provisions.            the RLT.
Upon disability, the Trustmaker has already

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     More specifically, what is the ROLE of the       authorize you or someone else to transfer the
Successor Disability Trustee? Here is the             property to the RLT.
checklist that we provide to clients, which we             6. Notify the bank or credit union,
ask them to share with their Successor Trustee        Trustmaker's professional advisors and
in case of disability:                                appropriate others that you are now the Trustee
                                                      for the disabled person. They will want to see a
     1. Carefully read the Trust document             copy of the doctors' letters, Affidavit of
(especially Article Four) for specific                Successor Disability Trusteeship or pertinent
instructions. Have two physicians write a             provisions of the Trust and your personal
private letter documenting the Trustmaker's           identification.
disability or incapacity. One physician should             7. Transact any necessary business or
be the Trustmaker's primary care physician, if        personal finances for the disabled person. For
available.                                            example, you should apply for any disability
     2. Notify the attorney who prepared the          benefits, pay insurance premiums, receive and
Trust document. He/she should be aware of the         deposit funds, pay bills (including mortgage,
disability in case the Trustee or a family            taxes and other obligations) and, in general, use
member needs to call with questions.                  the disabled person's assets to take care of
     3. With the two physicians' letters, have        him/her until recovery (re-certification by two
the attorney prepare an Affidavit of Successor        physicians). Always act with the utmost
Disability Trustee. Several duplicate originals       honesty at all times and document MAJOR
will be made for the Trustee. The Affidavit           decisions and actions.         There should be
will provide the Disability Trustee the authority     absolutely no commingling of Trust assets with
to exercise the fiduciary powers and control          your own assets. Keep a ledger of accounts
over the disabled Trustmaker's assets.                payable and a copy of all statements and
     4. Secure and inventory all property,            receipts.
especially real estate and valuable tangible               8. Collect all income due the disabled
personal property. Make sure you have the             Trustmaker. Keep a ledger of income received.
house and car keys, take care of any home             Keep all check stubs and letters of explanation.
maintenance items and keep all insurance                   9. Make assets productive, including the
coverage in force.                                    checking account. Review Article Seventeen
     5. Check all property (investments, assets,      for the Trustee's administrative and investment
vehicles, real estate, accounts, etc.) titles to      powers. Always exercise prudence, reasonable
make sure the property is owned by the RLT            care and skill when investing trust assets. If
or, in the case of retirement accounts and in         you lack the requisite skill or experience, use
some cases life insurance, has the RLT                the Trustmaker's professional advisors. If
designated as the beneficiary. If you identify        necessary, retain a skilled investment advisor.
any property (by the real estate deeds, car titles,
bank account signature cards, investment              ROLE OF THE SUCCESSOR DEATH
account titles, insurance policies, etc.) that is     TRUSTEE
owned by the Trustmaker individually, and not
owned in the name of the RLT (or payable on                As in the case of disability, the
death to the RLT), you should promptly seek           Trustmaker, upon signing his/her RLT, will
legal counsel concerning how to transfer such         always name a Successor Death Trustee or co-
property to the RLT. Having it outside of the         trustees. This individual, sometimes referred to
RLT ownership is very likely to cause probate         as a "fiduciary," may be the surviving spouse,
upon the Trustmaker’s death. There will be a          family member, close friend, corporate trustee
Power of Attorney document in the disabled            or the combination of these acting as co-
Trustmaker’s estate planning portfolio that will      trustees. Obviously, like the Disability Trustee,
naming a Death Trustee is an extremely                      5. PLEASE NOTE: DO NOT change
important decision and careful thought and            titles to any of the decedent's assets or make
advice should always be sought. Always                life insurance death claims or rollover
remember that the effectiveness and efficiency        decedent's IRA or other pension benefits until
of your Successor Trustee is in direct                you have verified the tax options with a CPA or
relationship with having your assets and              Estate Tax Planning Attorney. There are
beneficiaries of life insurance and retirement        important post-death tax planning options
plans appropriately titled (named) to your            (example, disclaimers) available that may be
Revocable Living Trust. For any assets not in         LOST if you act without professional tax
the name of the RLT, the "Pour-Over Will" will        advice.
allow the title to be changed at death into your            6. Secure and inventory property,
RLT through probate.                                  especially home, other real estate and valuable
     The following is a checklist we provide to       tangible personal property. Make sure you
clients to share with their Successor Death           have the keys, make arrangements to keep the
Trustee(s) in event of death:                         utilities on, keep all insurance in force, pay the
                                                      mortgage payments, etc. Start a list of all
    1.    Inform the family of your trusteeship       assets, ownership, beneficiary designations, and
and assist them as needed: funeral                    determine all debts/liabilities of the deceased.
arrangements, flowers, cemetery marker,                     7. Order at least 12-20 certified Death
announcement in paper, special wishes for             Certificates. Then, notify the bank or credit
memorial service, notifying friends, relatives,       union so you can start writing checks. The
employer, professional advisors, etc. Before          bank or credit union will want to see a copy of
you begin, make sure you check the                    the Death Certificate, your Affidavit of
Trustmaker's Estate Planning Portfolio (red           Successor Death Trustee, or pertinent
binder) under these TAB sections for                  provisions from the Trust reflecting your
instructions (1) Memorial/Burial and (2)              Trusteeship and your personal identification.
Location Lists (list of key advisors, list of close         8. Notify the decedent's professional
friends/ relatives, lists of important documents      advisors and appropriate others (see List of
and personal papers).                                 Advisors in Estate Planning Portfolio) that you
     2. Provide family adequate time for              are now the Trustee for the deceased
grieving. There is no need to rush into your          Trustmaker. Remind them not to change titles
Trustee duties until the environment has settled.     or execute IRA transfers until they receive
Notify the attorney who prepared the Trust            written instructions from you. Also, you may
document in case you need to call with                need to change the home address with the post
questions.                                            office.
     3. Carefully read and understand the                   9. Notify life insurance companies,
Trust document so you will know: (1) who the          retirement      plans,    military     affiliations/
beneficiaries are; (2) what they are to receive       associations and any others that will provide a
and when; (3) how many years the Trust will be        death benefit. Remember, do not file a death
on-going; (4) who, if any, are your co-trustees;      benefit claim on the decedent's life insurance,
and (5) your activities and duties per Trust          IRA, etc., until you have verified the tax
instructions.                                         options with a CPA or Estate Tax Planning
     4. Engage an attorney to prepare the             Attorney. Place death benefit proceeds in an
Affidavit of Successor Death Trustee for you.         interest bearing account in the name of the
An attorney's advice can be very helpful in           Trust until distributed to the beneficiary(s).
ensuring that you understand what the Trust           Keep copies of all forms and correspondence.
provides and your role therein.                       The Social Security Administration will be
                                                      notified by the funeral home.
        10. Collect all income due the deceased;       Fourteen), children or other beneficiary(s)
   keep a ledger of income received. Keep all          Trusts (Article Twelve). Your CPA or Estate
   check stubs and letters of explanation.             Planning Attorney should counsel you on this
   NEVER commingle trust/estate assets with            process since effective estate/income tax saving
   your assets.                                        results can be achieved if done properly.
        11. Collect and pay all contractual                16. Following the terms of the Trust,
   obligations, bills due, and taxes. Keep a ledger    distribute the property in this order:
   of accounts payable and keep a copy of all              a. Items set forth on the Memorandum of
   statements and all receipts.                                Tangible Personal Property
        12. Make assets productive during the             b. Specific Bequests of Cash and Property to
   estate/trust administration process.      Follow          individuals or charities (Article Seven)
   Article Six of your RLT for your Estate                c. If spouse survives, retain all assets in the
   Administration procedures. Always exercise                Trust under Article Nine and Ten for estate
   prudence, reasonable care and skill when                  tax protection
                                                          d. If there is no spouse (or spouse pre-
   investing Trust assets. If you lack the requisite         deceases) and there are minor children,
   skills or experience, use the decedent's                  retain assets in Trust under Article Eleven
   professional advisors. If necessary, retain a          e. If there are adult children, adult
   skilled investment advisor.                               beneficiary(s) or charities, divide Trust
        13. Make sure you keep any co-trustee                assets into respective Trust shares under
   and Trust beneficiary(s) fully informed from              terms/conditions of Article Twelve.
   the death of the Trustmaker until the
   completion of the Trust Administration
                                                       CLOSING THOUGHTS
   Process. They are permitted to have a copy of
   the Trust and supporting documents. Read                 Being selected and then serving as a
   Article Sixteen for your comprehensive set of       "Trustee" is one of the most important things
   instructions regarding general matters and your     you do for a loved one. Indeed, it is a high
   Trusteeship.                                        honor with a lot of responsibility and
        14. Engage a skilled CPA or Estate             accountability. With proper help and counsel,
   Planning Attorney for preparation of the            you will do a very good job and earn the
   decedent's final income tax returns and, if         satisfaction of knowing that you have served
   applicable, estate tax return, due nine months      the disabled or decedent Trustmaker and the
   from date of death.                                 Trust beneficiaries well.
        15. Begin (within the nine months) the
   creation and funding of additional sub-trusts
   within the RLT. For example, there may be
   Marital and Family Trusts (Articles Eight, Nine                          *****
   and Ten), Common Trust/Elder Parent Trust
   (Article Eleven), Grandchild Trust (Article




This article intended for general information purposes only and does not constitute legal advice. The
reader must consult legal counsel to determine how laws apply to their specific situations.

				
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