Before we get into the basics of living trust administration, we should first explain some broader details. A revocable living trust is a good alternative to a last will because it facilitates asset transfers outside of the costly and time-consuming process of probate. In addition to this, there are certain advantages and specific actions that you can facilitate with the trust that would not be possible if you use a last will as your primary vehicle of asset transfer.
If you establish a trust, you would be called the grantor or the settlor of the device. The trustee is the individual or entity that handles all the business of the trust, and the beneficiary is the person that can receive monetary distributions from the trust.
Some people assume that they should use a last will instead of a trust because they are afraid of surrendering control of their assets to the trustee while they are living. This is understandable, and there are irrevocable trusts that do involve surrendering incidents of ownership.
However, things are entirely different with a revocable living trust. You can act as the trustee and the beneficiary while you are alive and well. As a result, you do not surrender any control on any level, and you can even dissolve the trust entirely if you ever change your mind about it.
The long-term objective is to facilitate efficient asset transfers to a beneficiary after you are gone. To account for this, you name a successor trustee to handle the trust administration tasks after your passing, and you also name a successor beneficiary.
Getting back to the matter of flexibility and control, you will always have the ability to change the beneficiary or add another beneficiary or multiple beneficiaries. As the grantor of the trust, you can name a different successor trustee at any time. It is also possible to transfer ownership of property into the trust after you originally funded it when it is first established.
The Role of the Successor Trustee
When you are choosing a successor trustee, the first thought that comes to mind may be to name someone that you know personally that you have a lot of faith in. This is certainly a possibility, but there are many tasks that must be completed during the trust administration process, and it is an ongoing job. It is possible to engage a trust company, or the trust department of a bank to step in and act as the successor trustee.
This can be a good idea for a number of different reasons. First of all, shortly after your passing, there are some very specific steps that must be taken to facilitate the transition. A professional fiduciary would be well-equipped to take care of these tasks without any type of learning curve.
On the other hand, a layperson that is tasked with these responsibilities may be a bit overwhelmed. Of course, if you would rather name a person that you know and trust, this is understandable. Under these circumstances, if it is necessary, our firm can be engaged to help guide the trustee during the initial phases of the trust administration process. We can also be standing at the ready to help at any point in the future.
This being stated, there are some other advantages to be gained if you engage a fiduciary to serve as the successor trustee. If you name your brother to be the trustee, and he is about the same age as you, what happens after he passes away? Yes, you could have multiple successors, but this is rather inefficient. You wouldn’t have any of these concerns if you use a company rather than a particular individual.
Another benefit is the fact that there would be no conflicts of interest if your trustee is a professional that is completely unbiased. This can be important, especially if there are multiple beneficiaries. Plus, there is the matter of investing assets to generate earnings that can be distributed to the beneficiary or beneficiaries. Most people would see the wisdom in using a banking professional to make these types of decisions.
Attend a Free Seminar!
If you would like to learn more about trust administration and many other important estate planning topics, there are some great opportunities coming up for you in the near future. We are holding a number of seminars, and they are absolutely free to attend. You can visit our seminar page to check out the schedule and obtain registration information.