What Is a Successor Trustee?

A Successor Trustee is a person who has been named to take over management of a trust after the primary trustee dies, becomes unable to serve as trustee, or resigns.  Successor trustees are also called Successor Personal Representatives and Successor Executors.

Who Can Be Named as a Successor Trustee?

Successor Personal Representatives and Successor Executors are typically family members or friends of the creator of the original trust. Here are a few options to consider when selecting a Successor Trustee:

  1. Adult children or other relatives 
  2. Close family friends
  3. A financial advisor or tax professional
  4. An Estate Planning lawyer 
  5. A Trust company

What Are the Responsibilities of a Successor Trustee?

The Successor Trustee is legally obligated to perform the duties outlined in a Successor Trustee Agreement.  Upon accepting the Successor Trustee role, Successor Personal Representatives and Successor Executors accept full responsibility for the trust’s assets, liabilities, and distributions according to the will or other governing document.  These are the primary responsibility of a Successor Trustee:

  • Take possession of the trust’s assets
  • Prepare, sign and file all necessary tax returns 
  • Handle the administration of Successor Trustee accounts for taxes and probate fees
  • Create or update Successor Personal Representative or Successor Executor accounts as needed
  • Investment decisions regarding trust principal and income distributions
  • Distribution of trust principal to beneficiaries as outlined in the Successor Trustee Agreement

Why Choose a Successor Trustee for Your Trust?

The Succession process is quick, easy and can protect your trust from unnecessary court costs or time wasted by potential legal action.  Here are a few reasons why you should choose Successor Personal Representatives and Successor Executors for your trust:

  • Nominating Successor Trustees preserves the Succession process by allowing you to choose a successor trustee – instead of leaving it up to chance or defaulting to another person’s decision. 
  • Having Successor Personal Representatives and Successor Executor accounts up-to-date and ready to go at a moment’s notice ensures Succession takes place without unnecessary court costs or delays.
  • Probate fees and trust taxes can add up quickly when Successor Personal Representatives and Successor Executor accounts aren’t created in advance. 
  • Distribution can be confusing when Successor Personal Representatives and Successor Executors aren’t taking appropriate action on Successor Trustee accounts.

Process of Succession

There are two parts to Succession: Succession planning and Succession creation. Here’s how Successions work: Process_of_Succession

Step 1: Succession Planning 

Succession planning is all about choosing a Successor Personal Representative or Successor Executor for your trust. Succession planning should be discussed with your Successor Trustee – preferably in advance of any Succession event.

Step 2: Succession Creation

When you die, become ill or incompetent, or resign as trustee, Succession creation is activated.  Succession creation is the Successor Trustee account that is created for Successors to take over the trust’s responsibilities once they die, become ill or incompetent, or resign as trustees.

Steps 3: Succession Process

The Succession Process After Succession creation takes place, Successor Personal Representatives and Successor Executors will be able to take over Successor Trustee account responsibilities.  Succession events can happen quickly – within just a few days or weeks after your death, illness, or resignation as trustee. A Successor Personal Representative and Successor Executor must be named in the original trust for Succession to take place.  If they haven’t been designated as Successors, then state law will designate an appropriate person as Successor Personal Representative and Successor Executor.

Choosing and Naming a Successor Trustee

Succession planning is important. Here’s a Successor Trustee checklist to help you choose and name Successor Personal Representatives and Successor Executors:

  1. Choose two or more Successor Personal Representatives or Successor Executors
  2. Name Successor Personal Representative and Successor Executor accounts in the original trust document
  3. Meet with your Successors to discuss Succession planning
  4. Create Successor Trustee accounts for Successors to take over Succession responsibilities at the time of death, illness, or resignation
  5. Review Successor Personal Representative and Successor Executor accounts with your Successors annually 

Benefits When You Become a Successor Trustee

There are many benefits and perks that come with Successor Trustee roles. Here are some of them:

  1. One benefit of becoming a Successor Trustee is Succession planning. Successors get to choose Successor Trustees and Succession events.
  2. Another benefit of becoming a Successor Trustee is flexibility. Successors can change Successor Personal Representatives and Successor Executors, distribute assets or distribute accounts as needed for different circumstances
  3. Successors also have the options of increasing distributions, decreasing distributions, and shifting Succession responsibilities to Successor Personal Representatives and Successor Executors.

The Bottom Line

Choosing and naming Successor Trustees today ensures Succession events will go smoothly tomorrow. Succession is an important Successor Trustee responsibility to take seriously. A Successor Personal Representative and Successor Executor must be named in the original trust for Succession to occur. If they haven’t been designated as Successors, then state law will designate an appropriate person as Successor Personal Representative and Successor Executor. 

Successor Trustees are named as part of the original trust document. Succession happens automatically when Successors take over Succession responsibilities as directed by the trust instructions.
Successor personal representatives can distribute trust assets, Successor executors Succession duties that include making any changes to accounts or distributions as directed by the Successor Trustee instructions.
Successors can make changes to accounts or distributions as Succession events happen and Successors remain in control of Succession planning.
Any Successors that have been named in the trust document by the trust maker may become a Successor trustee if they meet Successor Trustee criteria of being 18 or older, competent to take on the duties of a trustee, and acting in good faith.

True Tamplin, BSc, CEPF®

About the Author
True Tamplin, BSc, CEPF®

True Tamplin is a published author, public speaker, CEO of UpDigital, and founder of Finance Strategists.

True is a Certified Educator in Personal Finance (CEPF®), author of The Handy Financial Ratios Guide, a member of the Society for Advancing Business Editing and Writing, contributes to his financial education site, Finance Strategists, and has spoken to various financial communities such as the CFA Institute, as well as university students like his Alma mater, Biola University, where he received a bachelor of science in business and data analytics.

To learn more about True, visit his personal website, view his author profile on Amazon, or check out his speaker profile on the CFA Institute website.