When talking about trusts, you are going to hear the word “trustee” tossed about. Simply put, a trustee (or trustees) are the people or institutions that manage a trust. While you are alive and well, it is highly likely that you will choose to be the trustee of your trust; after all you’re the best person to manage your own affairs. Should you become incapacitated or die, your successor trustee(s) will manage your affairs according to your wishes as stated in your living trust.
Do I need a corporate trustee?
That depends on your circumstances. Corporate trustees are experienced investment managers, and some people elect to use a corporate trustee (a bank or a trust company) to act as a trustee – either alone or as a co-trustee – because they feel that they don’t have the time, ability, or desire to manage a trust. Couples often use a corporate trustee in the event that one or both of them become incapacitated.
If something happens to me, who has control?
If you are married and your spouse is a co-trustee, then she can step in and act should you become incapacitated or die. If you are not married or if something happens to both you and your spouse, then your personally appointed successor trustee will take control. If you have a corporate trustee or co-trustee, they will continue to manage things for you as well.
What does a successor trustee do?
A successor trustee looks after your affairs according to your instructions for as long as they are needed. If you are incapacitated, your personally appointed successor trustee will use your assets to provide for your care and will manage your affairs until you recover and resume control. When you die, your successor trustee will pay your debts, file your taxes, distribute your assets quickly, privately, and without any court involvement.
Who can be a successor trustee?
Your successor trustee(s) can be individuals (adult children, other relatives, friends, etc) and/or corporate trustees (bank, trust company) that you trust. Should you choose to have individuals act as your trustees, you should be sure to name a second, third, and possibly fourth successors to hedge against the possibility that your first choice is unable or unwilling to act as a trustee.
Now, before this post ends, there is one other “T” word that gets mentioned a lot when talking living trusts – Taxes. Your living trust is not going to be exempt from income taxes – if your assets are generating income, you’ll still be taxed. And if your estate is worth more than the current “exempt” amount when you die, your estate will have to pay state and/or federal estate taxes. While a will can contain wording to create a trust (properly termed a testamentary trust) to save on estate taxes, these trusts only go into effect when you have died and do not provide any protection should you become incapacitated nor do they avoid probate.
If you would like to discuss your estate planning needs, Cameron Law is here to help.
For a complimentary initial consultation, call 507-206-4976
See Also:
- About Living Trusts – Part 1 “Introduction to living trusts“
- About Living Trusts – Part 2 “Avoiding probate with living trusts“
- About Living Trusts – Part 4 “FAQ’s“
Sorry, comments are closed for this post.