Tag: settlor

Can a Trust Creator Ever Act as the Trustee, and Why?

Sometimes, the creator of a trust also acts as its trustee. This situation most often happens when someone creates a trust intended to benefit relatives after the creator passes away.

Why Would the Trust Creator Act as the Trustee?

Often, someone placing his or her property in trust (a “settlor”) wants to maintain some control over the property. He or she might create a trust that appoints himself or herself as the trustee, at least for now. The property can get transferred into the trust, but the settlor still gets to make the management decisions. The settlor might even be one of the beneficiaries too (but cannot be the only beneficiary).

As long as the settlor is alive, he or she can manage trust property and add more property to the trust. Placing property in trust during your lifetime has many advantages, including privacy, asset protection, and sometimes tax benefits.

What Happens If the Settlor Passes Away?

If the settlor passes away, a successor trustee should take over trust management. This trustee is either named in the trust document or appointed by the court. The successor trustee picks up where the settlor-trustee left off, managing assets for the benefit of the beneficiaries.

Often, settlors structure their trusts so that assets in their estate “pour over” into their trust once they pass away. This may avoid the need for probate of the estate. It also may allow the settlor to more readily pass on assets to the trust beneficiaries over time.

If a settlor does not have a “pour over” will and trust, then assets not placed in trust before the settlor’s death must get distributed according to the will. Unfortunately, some settlors intend to transfer ownership of assets to their trust but never get around to completing the formalities. This can result in a complicated estate distribution and beneficiaries not receiving the benefits that the settlor intended. If you plan to be settlor and trustee, ensure that you complete all transfers of ownership as soon as possible.

Want to start planning your estate? Local attorney Andrew Szocka, Esq. provides thorough and speedy estate planning help in the Chicagoland area. To schedule a free initial consultation, visit the Law Office of Andrew Szocka, P.C. online or call the office at (815) 455-8430.

Information a Trustee Should Gather After the Trust Settlor Dies

After a trust settlor dies, the trustee often needs to gather important information about the trust. The settlor’s death triggers the need to inventory the trust assets and perform administrative tasks. A trustee in this situation must first locate documents relating to the trust, then notify beneficiaries.

Why Does the Trustee Need to Act After the Settlor Dies?

When the sole settlor of a revocable trust dies, the trust becomes irrevocable. No one can change the terms of the trust or add property to it. Moreover, the trust settlor is no longer the trustee – instead, a successor trustee takes over.

The successor trustee needs to notify the beneficiaries that the trust settlor has died and that the successor trustee is now in charge of the trust. In addition, the successor trustee needs to figure out which assets are part of the trust. Then the trustee must go about managing those assets and making distributions as required by the trust document.

Which Documents Does the Trustee Need?

The successor trustee must gather many different types of documents related to the trust. Most importantly, the trustee needs the trust document and any amendments. Further, the trustee probably needs documents relating to the settlor’s and the trust’s assets. For example, the trustee may need copies of the settlor’s will to determine if the settlor left any assets to the trust. In addition, the trustee might need:

  • The settlor’s bank statements
  • Statements for brokerage or investment accounts
  • The settlor’s death certificate
  • Title for vehicles that were left to the trust
  • Property deeds for any properties that were left to the trust
  • Life insurance beneficiary designations
  • Tax returns, including any filed on the trust’s behalf

Depending on which kinds of assets the settlor had or the trust now holds, the trustee may need even more documents. The trustee is tasked with transferring property ownership and assuring that trust assets are protected – even while the rest of the settlor’s estate goes through probate. To do so, the trustee needs these important documents.

Want to start planning your estate? Local attorney Andrew Szocka, Esq. provides thorough and speedy estate planning help in the Chicagoland area. To schedule a free initial consultation, visit the Law Office of Andrew Szocka, P.C. online or call the office at (815) 455-8430.

What Should You Do If Your Relative Chose You as His Trustee?

Not long ago, your relative told you that he chose you as the trustee of his trust. You are not sure what being a trustee means, and you don’t know what your responsibilities are. Maybe your relative is in poor health now or has recently passed away. What should you do?

  1. Find a Copy of the Trust Document

If your relative said that you are the trustee, then you are likely named in a trust document. This is a legal document explaining how the trust will run. You should ask your relative or whoever is handling his estate to give you a copy. If you cannot find a copy or your relatives refuse to hand it over, you may need a lawyer’s help or the help of the probate court to proceed.

  1. Read the Trust Document or Have a Lawyer Help

You will want to review the entire trust document to begin understanding your duties. The document should explain who benefits from the trust (the “beneficiaries”) and if you have any co-trustees or successor trustees. It will have more information about how the trust should run. In addition, you have legal obligations as a trustee that are not usually spelled out in the trust document. To understand these legal obligations, you may wish to have a consultation with a local lawyer who can help.

  1. Understand the Basics of a Trustee’s Duties

Trustees manage a trust’s assets for the benefit of beneficiaries. The trust creator (also called a “settlor”) transfers ownership of assets to you as trustee. Then you need to invest or take care of the assets. At appropriate times (often listed in the trust document), you make distributions of interest income, earnings, or principal from the assets to the beneficiaries.

Because you are holding onto the trust assets for someone else, you have a duty not to use the assets for your own self-interest. You also need to treat all the beneficiaries similarly, without favoring anyone. Your most important duty may be the duty to invest the assets prudently. This may require getting help from an investment professional.

Being a trustee can be a big job depending on the size and value of the trust’s assets. If you are ready to take it on, be sure to educate yourself about your many duties. Talking to a lawyer is always a good idea too.

Need help understanding your duties as a trustee? Local attorney Andrew Szocka, Esq. provides thorough and speedy estate planning help in the Chicagoland area. To schedule a free initial consultation, visit the Law Office of Andrew Szocka, P.C. online or call the office at (815) 455-8430.

Is It Better to Choose More Than One Trustee for Your Trust?

If you are in the process of creating a family trust, you may want to choose more than one trustee for your trust. Many parents consider naming their adult children as the co-trustees. If only one child is the trustee, it could cause resentment among the other siblings. But there are several significant problems that often arise with co-trustees managing a trust, so you may want to choose another option.

Problems with Co-Trustees

Co-trustees need to agree upon decisions that they make for the trust. It is not enough for one trustee to think that an action is a good idea, with the other trustee disagreeing. Both trustees must decide and agree together in the best interests of the beneficiaries. Sometimes trusts allow majority rule rather than unanimous decisions, but that does not solve the problem when there are only two trustees.

As you can imagine, family members who are trustees sometimes have disagreements. If the trust requires unanimous action or there are only two trustees, this could cause an issue with trust administration. Your trust cannot always divide up trust duties among several trustees, because each trustee has an overall fiduciary duty to the beneficiaries. So the co-trustees may reach a stalemate, or they may make a decision that is against one trustee’s better judgment.

Resolving Problems Among Co-Trustees

Co-trustees may need to seek probate court intervention when they cannot agree on a decision. The trustees may agree to ask the court for instructions, or one trustee may appeal to the court to prevent the other trustee from acting. If disagreements happen frequently, one trustee may resign, or one may petition the probate court for removal of the other trustee.

Going to court to resolve disputes among co-trustees is both expensive and time-consuming. The court costs may overburden a smaller trust, and ongoing litigation could harm the beneficiaries by holding up trust distributions. People thinking about appointment of multiple co-trustees may want to reconsider. Instead, they can name only one trustee – perhaps someone who is not a family member. Or they could name a family member but call a meeting to explain their decision to the other siblings or relatives.

Want to start planning your estate? Local attorney Andrew Szocka, Esq. provides thorough and speedy estate planning help in the Chicagoland area. To schedule a free initial consultation, visit the Law Office of Andrew Szocka, P.C. online or call the office at (815) 455-8430.

The owner of this website has made a commitment to accessibility and inclusion, please report any problems that you encounter using the contact form on this website. This site uses the WP ADA Compliance Check plugin to enhance accessibility.