What Happens to a Trust When the Trustee Dies
What Happens to a Trust when the Trustee Dies?
Well, it all depends on the Trust document and the terms described therein. The Trust document may have designated a successor trustee and a co-trustee. If this is the case, the co-trustee continues with the trust administration process. If a trustee dies while settling their responsibilities and paying off the beneficiaries, a new successor trustee will take over. Once again, the new successor trustee will start by providing all methods of communication, including Name, addresses, phone number, email address, to ensure the fiduciary duty of staying transparent throughout the trust administration process. There will be time spent for the new trustee to review the books and give an update to the beneficiary and heirs and expectations and reasonable timetables. The beneficiary must understand the courts will allow “reasonable” time for the new successor trustee to get acquainted with the estate in question.
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What happens to a Trust when the trustee dies?
Well, it all depends on the Trust document and the terms described therein. The Trust document may have designated a successor trustee and a co-trustee. If this is the case, the co-trustee continues with the trust administration process.
Can a Co-Trustee Act Alone
In this case, if the Successor Trustee dies during the process of distributing the assets to the beneficiaries, the co-trustee will continue with the trust administration process, and the courts will be updated to this fact. It is essential to have an estate planning attorney to discuss this matter. Transparency to the beneficiaries is imperative to stay compliant with the fiduciary duties. The co-Trustee will continue to give updates to the Trust Administration process, and all the pertinent information of the Co-Trustee.
Who will appoint a Trustee if No Beneficiary Wants to take on the Responsibility?
Now, if there is only one successor trustee and nowhere in the Trust document calls out for such an instance, i.e., a co-trustee, a new trustee will be appointed by a probate judge based on multiple factors. If the beneficiaries have a recommendation for the nominee, then the judge may consider it.
What is the main objective of the probate court in this instance?
The main objective is to make sure to keep the trust out of probate court. In all cases, it is crucial to look at the trust document as it typically has more than one level of successor trustees.
Key take away: To have in the trust more than one identified trustee is crucial because if the trustee dies, resigns, or is otherwise unable to serve, the trust itself can appoint the new trustee without going to probate court.
Regarding the co-trustee, if he or she may continue to serve alone or with a new co-trustee will depend on the trust terms. If you are a beneficiary or another party with a financial interest in the trust, you may petition to the court to have a particular trustee appointed. It gets tricky when no family members or other relatives are willing to serve as the trustee, and again at that time, the court may appoint a professional fiduciary to serve as a trustee.
What happens if a trust beneficiary dies before funds are disbursed?
If a beneficiary dies while the trust administration process is taking place, then the trust document itself creates the framework of what should happen. Many times the beneficiary’s shares may be disbursed among the other beneficiaries specified in the trust. In some other instances, the deceased beneficiary may have children, and the trust document may stipulate that the benefits shall go to his/her immediate family. It is very important to contact the trust and estate planning attorney to navigate through the distribution of assets.
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