Successor Trustee: Definition and Duties

In the American legal system, a successor trustee is an individual who takes over the responsibility of managing another person’s trust fund if they become incapable of doing so themselves. 

Whether you have been appointed as a trustee successor, are trying to choose someone to fill this position for you, or are just interested in finding out more about this role, you’re in the right place. In this article, we look at the successor trustee definition, their duties and responsibilities, and answers to other important questions.

Many people choose to set up trusts to provide extra protection over how certain valuable assets are handled after death. In the United States, a person setting up a trust must appoint a successor trustee. But what is the definition of successor trustee?

The successor trustee is the phrase used to describe the individual responsible for administering and managing the trust after the person who has created the trust, known as the grantor, becomes incapable of doing so. So, the successor trustee meaning relates essentially to this backup role.

Often, this transitional phase occurs upon the death of the grantor. Still, a successor trustee can also step in if the grantor becomes legally incapacitated or unable to make informed decisions due to factors such as an intellectual disability, mental disorder, dementia, or other medical conditions affecting cognitive functioning.

In this case, the successor trustees definition extends to managing the trust when the grantor's capacity is compromised. The grantor typically selects the successor trustee, who is specified in the declaration of trust.

The primary duties of a successor trustee are to manage the trust in question and distribute the assets within it as per the grantor’s best interests. However, the precise role of the successor trustee will depend on the set of instructions left behind by the grantor. 

Their duties will also vary depending on whether the grantor has passed away or become incapacitated. In the following sections, we look at the successor trustee’s duties in both situations.

In situations where the grantor has passed away, the successor trustee duties are to distribute the assets as per the declaration of trust and liaise with the executor of the will to pay off outstanding debts and close any accounts. As such, they are responsible for:

On the other hand, the duties of the successor trustee change if they’ve taken responsibility as the grantor is legally incapacitated but alive. They take over the role of the grantor to handle all affairs. As such, they will usually use the property in the trust to pay for the grantor’s end-of-life care and other outgoings while they are alive. Therefore, the successor trustee responsibilities are:

You may be wondering what is the difference between a trustee and a successor trustee? The words trustee and successor trustee are similar, which can cause some confusion. Indeed, the roles of both a trustee and successor trustee are pretty similar. Both individuals must look after the property and assets within the trust, acting as its rightful legal owner and making decisions in accordance with the declaration of trust.

However, the two run on different timelines. The trustee is responsible for managing all property and assets in the trust when it is first created. When talking about a revocable living trust, the trustee is also known as the grantor, and these two words are used synonymously. On the other hand, a successor trustee takes on the responsibility of the original trustee at a later date. This is either when the trustee passes away or becomes incapacitated.

Another two similar roles that people commonly get confused over are that of the successor trustee and the executor. Both of these individuals liaise and cooperate, when the grantor passes away, to ensure their trust is handled appropriately and the beneficiaries are given what they are entitled to. However, whereas the successor trustee’s main duty is to manage the trust itself, the executor is responsible for handling all the deceased’s affairs. 

The other main difference between a successor trustee and the executor is in terms of duration. The executor will only ever be given powers over the management of affairs in the event of death and must deal with the probate process immediately. 

Comparatively, the trust could state that some beneficiaries only get their inheritance when they reach a certain age. A common example is money being left to young children and released either when they turn 21 or when they graduate from college. This could potentially be years in the future, meaning the successor trustee could be in charge of protecting this inheritance for a long period.

The grantor holds the freedom to define successor trustee according to their discretion.  This is commonly a close relative or family friend, whereas others choose to appoint a financial advisor, estate planning attorney, or trust company to take on this responsibility. 

Whoever the grantor chooses then needs to accept the role for it to become official. If the individual chooses to accept, the grantor then typically organizes a meeting during which both can discuss the trust and ensure that the successor trustee has a complete understanding of their responsibilities.

On the other hand, the individual or organization chosen by the grantor can choose to decline the offer. Being a successor trustee is a big commitment and can take up a substantial amount of time, especially if the grantor is incapacitated or the named beneficiaries are young. In these cases, the grantor will need to find a new successor trustee to take on the role.

Once the appointment of successor trustee is confirmed, their active duties may not immediately commence. They might find a period of respite until a change in circumstances necessitates the initiation of trust administration. 

As stated, this will typically begin with this person notifying friends, family members, and financial institutions that they are the successor trustee. They will then be able to sign on the grantor’s behalf to finalize important financial decisions. However, there are a few steps you need to complete before this is possible:

After these steps have been taken, and it is proven that the original trustee is either dead or incapacitated, the successor can then legally sign on their behalf. When doing so, the signature needs to reflect their new position as trustee. 

Being appointed a successor trustee is a vital role that has the potential to be long-term and carries a lot of responsibility. They need to manage the trust on behalf of the grantor, something they could be doing for years. As such, anyone asked to be a successor trustee should ensure they understand the full responsibilities of what the role entails before committing.

On the other hand, anyone drafting a trust needs to ensure they appoint an individual or organization competent and trustworthy enough to take on these duties. It is often wise to appoint young successor trustees who will likely be around long enough to settle all issues. If you need further help planning your estate, we also recommend speaking to an estate planning attorney to guarantee you’re making the best choices for the property and assets you own.