These Guidelines are designed as an aid to those of you who have been entrusted to serve as successor trustee(s). It is not possible to answer all of your potential questions. However, we hope to answer those which will come up with some regularity.
You may have assumed the duties as successor trustee either because of the incapacity or death of the primary trustee(s). Therefore, these Guidelines are divided into two groups. Following is a discussion of the steps you should take if assuming responsibilities as a result of incapacity of the Trust's Settlor or Original Trustee.
Succession Due to Incapacity
If you have taken on the primary trustee responsibilities because of the incapacity of the primary trustee(s), you should take care of the following items:
- Locate all of the trust assets and make certain that title to the assets have been transferred into the name of the trust. If there are assets which have yet to be transferred into the trust, the person or persons holding a Durable Power of Attorney can complete the transfers. Since a Power of Attorney is no longer effective after the death of the Principal, it is important not to delay this step.
- Determine the needs of the Settlor or Settlors. It will be your responsibility to manage their funds, and to take care of their financial needs to the extent the funds of the trust permit.
- If long term nursing home placement is a possibility, consider whether or not it may be advisable to “gift” trust assets to someone other than the Settlor.
- Provide an annual account to the beneficiaries of the Trust which tells them what funds were in the trust, how much income the trust had, and how that income was spent.
- File the annual form 1040 of the Settlor(s) with the Internal Revenue Service.