Scenario: Your widowed mother was smart enough to have a trust drafted. As a result, her property can pass to you and the other beneficiaries without the lengthy and costly process of going to probate court. Now what?
When your mother had a trust drafted, she became both the Trustor (trust creator) and the Trustee (the person in charge of the trust). When she passed away, there is no longer a Trustor (trust creator) and the person she named in the trust becomes the Successor Trustee (the next person in charge). But, what are the duties of a Successor Trustee?
The answer: Many. The Successor Trustee has a fiduciary relationship with the beneficiaries, which means the Successor Trustee has a duty to act in the best interest of the named beneficiaries. This general duty owed to beneficiaries has various components. For example:
- Duty to Disclose: A Successor Trustee has a duty to let trust beneficiaries know when a trust becomes irrevocable (upon the Trustor’s passing). A Successor Trustee must disclose a complete copy of the terms of the irrevocable trust to a trust beneficiary if requested.
- Duty of Care: A Successor Trustee has a duty to follow what the Trustor said in regards to distribution of income or principal. A Successor Trustee also has a duty not to comingle trust funds with personal funds.
- Duty of Loyalty: A Successor Trustee must be completely unselfish and undivided in his/her loyalty to trust beneficiaries. A Successor Trustee must avoid self-dealing by not deriving a personal gain in any way from his/her administration of the trust. For example, a Successor Trustee should not sell himself/herself a piece of real property at a discount solely for the benefit of the Successor Trustee.
Bottom Line: Being a Successor Trustee should not be taken lightly. When a person becomes a Successor Trustee, he or she should consult an attorney to ensure he or she is compliant with California law as a fiduciary.
Tony does not charge for initial consultations. For more information, please contact Tony at 5703 Temple City Boulevard, 626-285-7033, or firstname.lastname@example.org.