Choose A Successor Trustee For Your Living Trust Who Can Do What's Needed

When you set up your revocable living trust, it's you who is the grantor and, generally, the trustee of it. But when you die, you'll need a successor trustee to handle all the obligations that your death creates. Because there are quite a few obligations to carry out, choose a successor that can handle them.

Like all trusts, your living trust has a trust document that rules on how the trustee must handle the trust's property for the trust beneficiaries according to your wishes. The trust - not you - is then owner of any property put into it. So you must re-title all that property in the trust's name. Drawing up the trust and changing titles are costs to you.

You may also assign a person as a successor or co-trustee to handle the trust assets if you become incapacitated before your death. While you're alive, you - as the trustee - can act on all the trust assets just as if they were yours. In fact, they're considered yours by the IRS. Or at your incapacity, your co-trustee can act as you would wish.

So be sure to choose a successor or co-trustee that can handle all that needs to be done when you die, and act in good faith to you if you become incapacitated. There a variety of obligations and duties for him to perform when you die. Here is a list of them:

* Locating and protecting your trust assets.

* Collecting life insurance policies, annuities, and retirement accounts for which your Living Trust the primary beneficiary

* Obtaining the date of death values for all of your trust assets.

* Determining who you owed money to and then paying off these debts.

* Assessing your income and estate tax liabilities. The living trust's assets and income are part of your estate.

* Preparing and filing all required income and estate tax returns.

* Paying any ongoing expenses of administering your trust until it's terminated and its assets distributed to your beneficiaries.

* Raising the cash necessary to pay off your debts, the ongoing expenses of administering the trust and estate and income taxes.

* Investing your trust assets until they can be distributed to your beneficiaries.

* And, finally, distributing what's left over to your beneficiaries.

You can see that there's a lot to take care of. Your successor trustee can certainly enlist the help of your estate lawyer or some institution to handle much of the details. But he should be competent to make decisions where they need to be made.

Though settling the trust should not cost as much as probating the estate, it's not free. If your successor trustee is a family member, he may defer any charge for his help if his efforts are minimal. But if he oversees the use of an estate lawyer to handle the much of the responsibility, that lawyer will have to be paid. And that comes out of trust assets.