The selection of the right person or institution is key to having a successful trust and is often overlooked when the trust is created. Typically the person who creates the trust will serve as the initial trustee which works well for most and during the period which the trust is revocable. However, what happens when that person passes or suffers a disability or accident that renders them incapacitated is where things become more challenging. At that time the party designated as a successor trustee will succeed to the office and perform the functions and duties as outlined in the trust document and be subject to fiduciary duties imposed by law.
Too many times, parties will name family members or acquaintances without giving much thought to the responsibilities placed upon that party and whether they are capable of performing the duties competently or without reservation. As a general rule, the party selected must have some degree of business acumen and discipline to address pressing issues that arise in administering the trust. An anecdote that I often use with clients is if they are considering naming someone as a successor trustee but when they visit that person and they have weeks of unopened mail unattended to then they probably aren’t the best choice for a successor trustee.
As a guide, the person selected must be able to take all actions that you would normally take in your place, such as paying bills, monitoring investments, filing tax returns, making payments for the benefit of loved ones, addressing insurance concerns and running a business if necessary. Additionally, the probate code places numerous responsibilities on a successor trustee such as proving notices, accounting to beneficiaries and allocating income and expenses among assets held in the trust.
California law imposes numerous fiduciary duties on the trustee, a breach of which can lead to personal liability for the trustee. Therefore the person designated must be capable of diligently performing their role as trustee and willing to do so in a responsible manner. Of additional concern is the makeup of the family members and family dynamics. Are there family members who may be more difficult than others? Is the person named able to handle difficult persons or act impartially amongst the interested persons? If the answer is yes then prudence dictates that selecting a professional trustee or trust company may be the best choice.