Who Should You Choose as Your Successor Trustee? A Comprehensive Guide

As an estate planning attorney with nearly three decades of experience, I've seen firsthand how the choice of successor trustee can make or break even the best-crafted trust. Your successor trustee holds your financial future and your family's inheritance in their hands. 

In this comprehensive guide, we'll explore everything you need to know about choosing the right successor trustee - from understanding what this crucial role entails to weighing the pros and cons of different trustee options. By the end, you'll have clear direction on how to make this critical decision for your unique situation.

Table of Contents:

1. What Does a Successor Trustee Actually Do?
2. When Does a Successor Trustee Take Over?
3. The Qualities of an Ideal Successor Trustee
4. Option 1: Choosing Adult Children as Trustees
5. Option 2: Selecting Other Family Members or Friends
6. Option 3: Professional Trustees - Banks and Trust Companies
7. Comparing Your Options: Family vs. Professional Trustees
8. Creating Checks and Balances With Co-Trustees
9. How to Set Your Trustee Up for Success
10. Special Considerations for Blended Families
11. The Importance of Trustee Removal Provisions
12. Next Steps: Securing Your Legacy

What Does a Successor Trustee Actually Do?

Before diving into who should serve as your successor trustee, let's clarify exactly what this role entails. Many people drastically underestimate the responsibilities involved.

A successor trustee steps into your shoes when you can no longer manage your trust yourself. Depending on how your trust is structured, this might happen during your lifetime if you become incapacitated, or after your death.

Here's a glimpse at the job description:

During Incapacity:

• Managing all trust assets and investments
• Paying your bills and handling your finances
• Making distributions for your care and support
• Filing tax returns for the trust
• Making healthcare decisions (if named in your healthcare documents)
• Communicating with your family members about your care

After Death:

• Gathering and valuing all trust assets
• Notifying beneficiaries and relevant agencies
• Paying final bills, debts, and taxes
• Filing final tax returns
• Distributing personal property
• Selling real estate or other assets if necessary
• Interpreting trust provisions and making distribution decisions
• Communicating with beneficiaries throughout the process
• Keeping detailed records of all actions
• Potentially managing ongoing trusts for children or other beneficiaries

Let me share a story that illustrates just how demanding this role can be.

The Jackson Family Trust

Several years ago, I worked with a client who had worked with another law firm to create a trust naming her eldest son, Tom, as successor trustee. She chose Tom because he was "good with money" and lived closest to her. What Margaret didn't consider was that Tom had a demanding full-time job and three young children.

When Margaret suffered a severe stroke at 72, Tom suddenly became responsible for managing her $1.2 million estate, selling her home, coordinating her care, and handling complex medical and financial decisions—all while working full-time and raising his family.

Within months, Tom was overwhelmed. Bills were paid late. Investment decisions were postponed. Family tensions rose as siblings questioned his decisions. Tom eventually admitted he couldn't handle the role, and the family had to petition the court to appoint a professional trustee—a costly and time-consuming process that could have been avoided with better planning.

This story underscores an important reality: being a successor trustee is essentially a part-time (or sometimes full-time) job that requires significant time, knowledge, and emotional resilience. Also, make sure your plan names a successor trustee and/or includes provisions to easily name a successor trustee in the event your named trustee is unwilling or unable to act for any reason.

When Does a Successor Trustee Take Over?

There are two primary scenarios when your successor trustee steps into action:

Scenario 1: Incapacity

If you become mentally or physically unable to manage your affairs, your successor trustee takes control of your trust assets and uses them for your benefit. This helps avoid court-supervised guardianship or conservatorship proceedings, which can be expensive, public, and restrictive.

Scenario 2: Death

After your death, your successor trustee administers your trust according to your instructions. This includes gathering assets, paying debts and taxes, and distributing remaining assets to your beneficiaries.

Both scenarios demand different skills and present unique challenges. The person who might excel at managing your finances if you become incapacitated might not necessarily be the best person to handle the distribution of your assets after your death.

The Qualities of an Ideal Successor Trustee

Based on my experience helping thousands of clients through this decision, here are the key qualities to look for in a successor trustee:

1. Trustworthiness

This should go without saying, but your successor trustee must be someone of impeccable integrity. They'll have access to and control over your assets with limited supervision.

2. Financial Responsibility

Your successor trustee doesn't need to be a financial genius, but they should demonstrate basic financial literacy and responsibility in their own life.

3. Organization and Attention to Detail

Trust administration involves tracking numerous details, maintaining records, meeting deadlines, and following specific procedures.

4. Availability and Proximity

Consider whether your potential trustee has the time to devote to this role and whether their geographic location could create challenges.

5. Diplomatic Skills

Family dynamics can be complicated, especially during emotional times. Your trustee should be able to communicate clearly and handle conflicts diplomatically.

6. Persistence and Advocacy

There will inevitably be challenges in administering your trust. Your trustee needs to be someone who won't give up when facing obstacles.

7. Willingness to Serve

This often-overlooked factor is crucial. Have you actually asked your potential successor trustee if they're willing to take on this responsibility?

With these qualities in mind, let's examine the main categories of potential successor trustees.

Option 1: Choosing Adult Children as Trustees

For many people, adult children are the first choice for successor trustee. This makes sense on many levels—your children know you, presumably care deeply about honoring your wishes, and have a personal stake in proper trust administration.

Advantages of Naming Children as Trustees:

1. Personal Connection

Your children know you, your values, and your wishes better than most others. This personal understanding can be invaluable when making discretionary decisions.

2. Cost Savings

Family members typically serve without compensation or for modest fees, potentially saving thousands compared to professional trustees.

3. Flexibility and Accessibility

Your children may be more accessible and responsive than an institutional trustee with hundreds of clients.

4. Knowledge of Family Circumstances

Your children understand family dynamics and special needs that might affect distribution decisions.

Real-Life Example:

One of my clients, Robert, named his daughter Sarah as successor trustee. Sarah was a nurse and intimately familiar with Robert's medical conditions, preferences and financial matters. When Robert developed Alzheimer's disease, Sarah was able to effectively manage his financial affairs and make care decisions that perfectly aligned with her father's previously expressed wishes—something a professional trustee might have approached more generically.

Disadvantages of Naming Children as Trustees:

1. Family Conflicts

Even in the most harmonious families, money matters can create tension. Placing one child in authority over their siblings' inheritances can strain relationships.

2. Lack of Expertise

Most people aren't familiar with trust administration, tax laws, investment management, or the legal requirements of being a trustee.

3. Time Constraints

Trust administration is time-consuming, often requiring hundreds of hours of work. Your children likely have their own careers, families, and responsibilities.

4. Emotional Burden

Administering a parent's trust during incapacity or after death can be emotionally taxing, especially while simultaneously grieving.

5. Liability Concerns

Trustees have fiduciary responsibilities and can be personally liable for mistakes, potentially putting your child's personal assets at risk.

Real-Life Example:

I once worked with three adult siblings whose mother had named the eldest son, David, as successor trustee. Despite David's best intentions, his sister believed he was favoring himself in distribution decisions. The resulting family conflict led to a costly legal battle that depleted nearly 30% of the trust assets and permanently damaged their relationships.

Best Practices If Naming Children:

If you decide to name a child as successor trustee, consider these strategies:

1. Choose the most qualified child, not necessarily the oldest - Trustee selection shouldn't be based on birth order or to avoid hurt feelings.
2. Consider naming co-trustees - Having children serve together can provide checks and balances, though it may also create deadlocks.
3. Include detailed instructions - Clear guidance in your trust document can help prevent misunderstandings and conflicts.
4. Budget for professional help - Authorize your trustee to hire financial advisors, tax professionals, and attorneys as needed.
5. Have candid family discussions - Explaining your reasoning to all children can help prevent future resentment.

Option 2: Selecting Other Family Members or Friends

Sometimes adult children aren't available or appropriate choices for successor trustee. In these cases, many people turn to other relatives or close friends.

Advantages of Naming Other Family or Friends:

1. Personal Knowledge

Like your children, other close family members or friends likely know your values and preferences well.

2. Objectivity

Unlike children, other relatives or friends may bring more objectivity to family dynamics and distribution decisions.

3. Specific Expertise

You might have a financially savvy sibling, cousin, or friend with relevant professional experience that makes them well-qualified.

4. Cost Efficiency

Similar to children, other family members or friends often serve for nominal compensation.

Real-Life Example:

My client Ellen had no children but a financially sophisticated niece who worked as an accountant. The niece understood Ellen's financial situation, had appropriate skills, and didn't have the emotional complications of being a direct beneficiary. She successfully administered Ellen's trust after her passing, precisely following Ellen's wishes to support her favorite charities.

Disadvantages of Naming Other Family or Friends:

1. Competing Priorities

Your family member or friend has their own life, career, and family that may limit their availability and attention.

2. Relationship Strain

Serving as trustee can put friends or family members in difficult positions when making decisions that affect beneficiaries.

3. Aging Concerns

If you select someone from your own generation, they may develop health or capacity issues around the same time you do.

4. Knowledge Limitations

Like your children, other family and friends may lack specialized knowledge about trust administration.

Real-Life Example:

One gentleman named his brother-in-law as successor trustee because of his financial background. However, when the client became incapacitated, the brother-in-law was 73 years old and beginning to experience health problems himself. Thankfully, I was able to assist them in selecting a different family member and get it all “legally documented” before it became an expensive issue for their family.

Best Practices If Naming Other Family or Friends:

1. Check their willingness first - Never assume someone is willing to serve without explicitly asking.
2. Consider age and health - Choose someone likely to remain capable throughout the potential duration of their service.
3. Provide for compensation - Even if they decline payment, giving the option acknowledges the significant responsibility involved.
4. Name multiple successors - Always name backup trustees in case your first choice becomes unwilling or unable to serve.

Option 3: Professional Trustees - Banks and Trust Companies

For some people, one solution is appointing a professional trustee—typically a bank trust department, trust company, or sometimes an attorney or CPA who specializes in trust administration.

Advantages of Professional Trustees:

1. Expertise and Experience

Professional trustees handle trusts every day and have systems and processes in place to manage all aspects of administration.

2. Objectivity and Neutrality

Professional trustees can make decisions without emotional attachment or family pressure.

3. Continuity

Unlike individuals, institutions don't die, become disabled, or move away. They can provide consistent management for generations.

4. Regulatory Oversight

Professional trustees are typically subject to regulatory supervision and carry insurance.

5. Investment Management

Many professional trustees have sophisticated investment capabilities and can manage complex portfolios.

Real-Life Example:

My clients James and Martha had a special needs child and substantial assets. They chose a professional trustee to manage their son's lifetime trust, knowing that the trustee would outlive them and provide experienced management of his benefits and financial affairs long after they were gone. The professional trustee's expertise in special needs planning preserved their son's government benefits while significantly enhancing his quality of life.

Disadvantages of Professional Trustees:

1. Cost

Professional trustees typically charge annual fees based on a percentage of assets under management, often 1-2% annually. For larger trusts, this can represent significant costs.

2. Impersonal Service

Some institutional trustees assign many clients to each trust officer, potentially resulting in less personalized attention.

3. Asset Preferences

Many professional trustees prefer managing marketable securities and may be reluctant to deal with real estate, closely-held businesses, or collectibles. Some may even decline to serve if the trust holds these assets.

4. Distribution Hesitancy

Since professional trustees are often paid based on assets under management, they may have a financial incentive to retain rather than distribute trust assets, even when distributions would be appropriate under the trust terms.

5. Personal Property Challenges

Professional trustees may struggle with or charge additional fees for distributing personal property, selling homes, or handling sentimental items. Many professional trustees will even refuse to handle the sale of a home or other real estate which often results in additional expense and stress for beneficiaries.

6. Smaller or Less Complex Estates

Many professional trustees and trust companies are unwilling to take on smaller or less complex estates.

Real-Life Example:

One family I worked with had a trust administered by a large bank. When the time came to sell the family home and distribute personal belongings, the bank hired third-party services for these tasks, resulting in additional costs of over $15,000. Family heirlooms were treated as mere assets to be liquidated, causing significant distress to the beneficiaries.

Another family discovered that despite trust language directing "liberal distributions" to support her father's comfort, the corporate trustee consistently denied reasonable requests for additional funds that would have enhanced his quality of life. When confronted, the trust officer acknowledged “off the record” they were incentivized to "preserve principal" because their compensation was tied to the trust's value.

Best Practices If Naming Professional Trustees:

1. Interview multiple options - Not all professional trustees are the same. Meet with several to find the best fit.
2. Clarify fees upfront - Understand all potential charges, including additional fees for tax preparation, real estate management, or extraordinary services.
3. Ask about their distribution philosophy - How do they interpret standard distribution provisions? How quickly do they respond to distribution requests?
4. Consider a hybrid approach - Some people name both a family member and professional trustee, or even split up the trustee duties, combining personal knowledge with professional expertise.
5. Include detailed instructions - Be explicit about your goals, values, and wishes regarding distributions, especially for subjective standards like "comfort" or "maintaining lifestyle."

Comparing Your Options: Family vs. Professional Trustees

To help you visualize the differences between family and professional trustees, consider this comparison chart:

Creating Checks and Balances With Co-Trustees

One solution that works well for many families is naming co-trustees—multiple trustees who serve simultaneously. This can provide an effective system of checks and balances.

Common Co-Trustee Combinations:

1. Multiple Children Together This approach can involve all children equally, though it requires them to work cooperatively.
2. One Child Plus Professional Trustee This combines family knowledge with professional expertise. That being said, many professional trustees will refuse to act with a family member.
3. Family Member Plus Friend This can bring objectivity while maintaining personal connection.
4. Family Member Plus Financial Advisor This leverages an existing trusted relationship with financial expertise.

Key Considerations for Co-Trustees:

Decision-Making Authority

Your trust should specify how decisions are made—unanimously, by majority, or with different trustees having authority over different matters.

Geographic Challenges

Co-trustees in different locations may face practical challenges in coordination.

Potential for Deadlock

Without clear decision-making provisions, co-trustees may reach impasses that delay administration.

Real-Life Example:

One of my clients named his son and daughter as co-trustees with a financial advisor to manage the trust funds for the family. The son lived locally and handled day-to-day matters, the daughter provided oversight, and the professional managed investments and ensured compliance with legal requirements. This combination worked exceptionally well, balancing efficiency, family involvement, and professional expertise.

How to Set Your Trustee Up for Success

Regardless of whom you choose as successor trustee, there are steps you can take now to make their future job easier:

1. Create a "Trustee Manual"

Compile important information about your assets, accounts, advisors, and preferences. Include:

• List of assets and where they're located
• Account numbers and contact information
• Names and contact information for your advisors
• Location of important documents
• Digital asset information (with appropriate security measures)
• Personal property instructions

2. Write a Letter of Instruction

Beyond the legal language of your trust, write a personal letter explaining your values, hopes, and reasoning behind certain provisions.

3. Introduce Your Trustee to Your Advisors

Facilitate relationships between your successor trustee and your financial advisor, accountant, and attorney.

4. Consider Trustee Training

Some law firms (including ours) offer trustee orientation sessions for named successor trustees.

5. Review and Update Regularly

Circumstances change. The perfect trustee today might not be the right choice in five years.

Real-Life Example:

A client of mine, Richard, created a detailed trustee manual with his asset information, advisor contacts, and even photographs of specific personal items with notes about their significance and which family members should receive them. He updated this annually. When he unexpectedly passed away, his daughter said this resource was "an incredible gift" that made a difficult time much easier to navigate.

Special Considerations for Blended Families

Choosing a successor trustee can be particularly challenging in blended families, where competing interests between a current spouse and children from previous relationships create potential conflicts.

Common Approaches for Blended Families:

1. Independent Professional Trustee

This option provides neutrality when family members may have conflicting interests.

2. Co-Trustees Representing Different Interests

For example, naming both your current spouse and a child from a previous marriage.

3. Different Trustees for Different Beneficiaries

Creating separate trusts with different trustees for different beneficiary groups.

4. Trust Protector Oversight

Adding a trust protector who can replace the trustee if they aren't acting appropriately.

Real-Life Example:

In one blended family situation, my client Jerry had children from a prior marriage and wanted to provide for his current wife, Linda. We created a trust with a professional trustee who would manage assets for Linda's lifetime benefit while preserving principal for Jerry's children. We also appointed a trust protector—a trusted family friend—who could replace the trustee if they weren't balancing the competing interests appropriately. This structure provided security for Linda while assuring Jerry's children that their inheritance would be protected.

The Importance of Trustee Removal Provisions

Even with careful selection, circumstances change. Your trust should include provisions allowing for trustee removal and replacement.

Effective Removal Provisions Include:

1. Clear Triggers for Automatic Removal

Such as incapacity, felony conviction, or bankruptcy of the trustee.

2. Beneficiary Removal Rights

Providing specific terms in your trust for the removal and replacement of trustees if needed.

3. Trust Protector Authority

Designating someone with the power to remove and replace trustees and amend the trust in the event of changing laws and circumstances.

4. Resignation Procedures

Clear processes for how a trustee can resign and who steps in next.

Real-Life Example:

One client included provisions allowing 75% of adult beneficiaries to remove and replace the trustee without cause. Years later, after the corporate trustee they had selected was acquired by a larger institution, service quality declined dramatically. The beneficiaries were able to efficiently transition to a more responsive trustee without court involvement, saving substantial time and money.

Next Steps: Securing Your Legacy

Choosing the right successor trustee is one of the most important estate planning decisions you'll make. The right choice provides peace of mind knowing your wishes will be honored and your loved ones cared for according to your intentions.

Here are the key takeaways from this guide:

1. Be realistic about the trustee role. It's a demanding job requiring time, knowledge, and emotional intelligence.
2. Consider the specific needs of your situation. The best choice depends on your family dynamics, asset complexity, and long-term goals.
3. Don't assume family members are always the best choice. While they bring personal knowledge, they may lack expertise or objectivity.
4. Understand the trade-offs with professional trustees. They offer expertise and continuity but at higher cost and potentially with less personal attention.
5. Consider hybrid approaches. Co-trustees can provide checks and balances that combine the best of both worlds.
6. Provide clear guidance. Help your trustee understand not just what you want done, but why.
7. Build in flexibility. Include provisions for trustee removal and replacement if circumstances change.

Your choice of successor trustee will have profound implications for your loved ones during vulnerable times. This isn't a decision to make lightly or based solely on avoiding hurt feelings.

How We Can Help

At Roulet Law Firm, P.A., we've guided thousands of clients through this crucial decision over nearly three decades of practice. We understand the nuances of trustee selection and can help you:

• Evaluate potential trustees based on your specific situation
• Create clear trustee powers and responsibilities tailored to your needs
• Design effective co-trustee arrangements when appropriate
• Draft comprehensive trust provisions that give your trustee proper guidance
• Develop trustee removal provisions that protect your beneficiaries
• Create supporting documents to help your trustee succeed

Most importantly, we take the time to understand your unique family dynamics, asset structure, and long-term goals to recommend the trustee arrangement that best serves your specific needs.

Whether you're creating a new trust or reviewing and updating an existing one, the trustee selection deserves careful consideration with professional guidance.

If you would like help creating your estate plan, or updating your existing one, call us today at either our Florida office at (941) 909-4644 or our Minnetonka, Minnesta office at (763) 420-5087 to schedule your consultation. Or, you can fill out the contact form on this page and a member of our team will reach out to you to schedule your consultation.

In the meantime, if you would like to discover more, here are some additional resources for you:

Join Us in my upcoming masterclass where I reveal strategies I use with my private clients and their families to help them avoid probate, save on taxes, protect the money they leave for their kids in the event they get divorced, and much more. Click here to sign up.

Download your copy of my book, Save Our Home: How to Protect Your Home and Life Savings From Long Term Care and Nursing Home Costs to discover strategies to protect your home and life savings from long term care and nursing home costs. Click here to get your copy.

About the Author: Chuck Roulet is an estate planning and elder law attorney with nearly 30 years of experience. He practices in both Minnesota and Florida, helping clients protect their assets and provide for their loved ones through sophisticated, personalized planning. Chuck has been interviewed by USA Today, Live Life Large, Money Matters, The Epoch Times, and other national and local media. He regularly teaches continuing education to other attorneys and financial professionals across the globe