Living Trust - Successor Trustee Responsibilities

"What are the responsibilities of the Successor Trustee in a Living Trust? 1. Do they have to show an accounting of everything listed in the Trust and the pour-over will? Do they have to show all decedent's bank accounts, mutual funds, stocks, etc. to the beneficiaries of the Living Trust? 2. Are they responsible for pulling in all the accounts of the decedent whether originally listed in trust or not? 3. How do the beneficiaries of the Trust get an accounting of the Living Trust if the Successor Trustee refuses to provide any information about the Trust? 4. What recourse do beneficiaries have if they feel the Successor Trustee is being less than forthcoming about all the decedent's assets? "

Great question. Lots of people have living trusts but few really think through how they are implemented and carried out, after disability or death. First, the piece of advice you don't want (but need) and then some details to get you going.

#1 -- You must (that means REALLY) must consult a lawyer in the state where the decedent died and the decedent's will is admitted to probate. If this is different then the state that the living trust is governed by, you might need to speak to an attorney in that state also. This is vitally important since state laws differ and itÆs important to know BEFORE you start what your obligations are.



When you meet with the attorney you need to understand the details of your role. Are you also executor under the will? Or just trustee. If both you need to understand the different obligations you have in each role. The fact that the will is a pour over (transfers all assets to the trust following death) does not mean you don't have other obligations (i.e., all the general obligations of an executor to marshal assets, pay debts and taxes, perhaps distribute personal property, insure the estate while you hold assets, etc.). As trustee your role is to adhere to the terms of the trust and implement the trust provisions. This might mean addressing many or all of the points an executor has, but in your capacity as trustee and for trust assets. You might distribute assets to the beneficiaries and wind up your role quite quickly. On the other hand, the living trust may pour into trusts for children or others that will continue on for decades (or longer) so your role may be for a long duration.



So at the meeting with the attorney you need to understand what roles you have have the documents reviewed with you so you understand each step you must take, and what state law says about it all.



There is another important step to take. You need to have the estate attorney you meet with review the assets held in the decedent's name (which pass under the will perhaps to the trust), assets passing by beneficiary designation (e.g., IRA, insurance, etc.) over which you may have no control (but possibly some responsibilities), and assets already in the trust. The flow is important to understand your responsibilities.



Now for some of your more specific questions, understanding that the issues you really need to address may be quite different after your overview meeting with an attorney.

What are the responsibilities of the Successor Trustee in a Living Trust? They depend on the document, on state law, the nature and size of the estate and the needs of the beneficiaries. You are a fiduciary - you are in a position of trust to marshal all assets in or payable to the trust, pay any debts or claims, and handle the assets as the trust directs (unless state law, etc. affects this).

1. Do they have to show an accounting of everything listed in the Trust and the pour-over will? You must in all cases keep detailed and accurate records. Do they have to show all decedent's bank accounts, mutual funds, stocks, etc. to the beneficiaries of the Living Trust? It depends. If a beneficiary is entitled to a $5,000 cash bequest, they may not need to see any of these details. If the beneficiary is entitled to the entire estate, they may and perhaps should see a complete accounting. However, in most cases something less then a full formal "accounting" is done to save cost. That decision, however, you should make based on the facts of the specific case and with the guidance of an attorney. In some cases you have no choice.

2. Are they responsible for pulling in all the accounts of the decedent whether originally listed in trust or not? It depends on the nature of the assets, terms of the will, trust, etc. If an asset transfers to a named beneficiary by operation of law through a beneficiary designation (e.g., an insurance policy) you may have no involvement. If the will pours assets into the trust and you are the trustee it is your responsibility to address them and be certain that they are received. If the trust is named the beneficiary of an insurance policy, for example, it is your responsibility to collect the proceeds.

3. How do the beneficiaries of the Trust get an accounting of the Living Trust if the Successor Trustee refuses to provide any information about the Trust? If the beneficiary is entitled to information by terms of the trust, it must be provided unless there is some overriding legal reason. Both the interpretation of the trust and any applicable law should be done in consultation with an attorney. If the trustee refuses to provide information that is required by the trust or state law to the beneficiaries, the beneficiaries can bring an action in court to compel the accounting, and at that point might as for the trustee to be replaced for failure to carry out his or her role properly. This could be costly and messy for all.

4. What recourse do beneficiaries have if they feel the Successor Trustee is being less than forthcoming about all the decedent's assets? See above. First hire a lawyer to review the situation. If the trustee does not appear to be handling matters properly the beneficiary's lawyer will likely write the trustee's lawyer first asking for reasonable disclosure and to have any questionable items explained. In most cases it should get resolved at this level. If not, the beneficiary's attorney may have to bring a court action. See a lawyer.