If you are considering the addition of a trust agreement to your estate plan you will need to make a number of important decisions should you decide to create a trust. Deciding who to appoint as the Trustee of your trust is one of those decisions. People often make the mistake, however, of stopping at the appointment of a Trustee when, in fact, appointing a successor Trustee is just as important as appointing the original Trustee. Understanding why a successor Trustee is important will hopefully prevent you from making this mistake.
Although trusts come in many forms, all trusts share a few basic elements – a Trustor (the person who creates the trust), beneficiaries (people/entities who benefit from the trust), assets to fund the trust, and the Trustee. The duties and responsibilities of a Trustee are numerous and varied and include:
Managing trust assets
Investing trust assets
Communicating with trust beneficiaries
Following the terms of the trust
Distributing trust funds pursuant to trust terms
Preparing and paying trust taxes
If you create a testamentary trust, the trust will not take effect until after your death, meaning you will not be around to correct any errors in the trust agreement. A revocable living trust can be modified should an error be made in the creation of the trust; however, an irrevocable living trust cannot be changed or modified once it takes effect. If you fail to appoint a successor Trustee, and/or include a provision for the appointment of a successor in your trust terms, and you created a trust that you cannot modify after it takes effect, your trust could fail.
Your original Trustee could be unable to serve for any number of reasons, including death, incapacity, or unavailability for any other reason. In the absence of a successor named in the trust agreement, your trust may effectively come to a standstill. A court will need to become involved in the appointment of a successor Trustee which could take valuable time and money from the trust. Moreover, the court may appoint someone you don’t even know to manage your trust. If you do not want to jeopardize the success of your trust and you refer to decide for yourself who will manage your trust it is imperative that you appoint at least one successor Trustee and that you include a provision in your trust agreement that provides a method for the appointment of successive Trustees should they be needed.
If you have additional questions or concerns about your Texas estate plan, contact the experienced Texas estate planning attorneys at The Mendel Law Firm, L.P. by calling 281-759-3213 to schedule your appointment today.