This article about successor trustees by estate planning attorney Joy C. McNair and the McNair Law Group PLLC, is not legal advice. It is for informational purposes only. To get specific legal advice in Texas, contact our law firm today at (281) 407-9830.

When it comes to estate planning in Texas, you may come across terms like trustee and co-trustee. But what do these terms mean, and how do they differ?

Many people are familiar with the concept of a trustee. However, what happens when the initial trustee can no longer fulfill their duties?

This is where a successor trustee comes into play. In this blog post, we will explore the differences between a trustee and a successor trustee, the responsibilities of a successor trustee in Texas, and why having one is crucial for ensuring your wishes are carried out effectively.

Revocable Living Trust & Other Types Of Trusts

Trustees are people or entities who manage trusts. Whether it is a revocable living trust or any other type of legal trust, the term for the person "in charge" or trust company responsible is trustee.

What Are The Successor Trustee's Responsibilities in Texas?

In Texas, a successor trustee has many of the same duties and powers as an original trustee.

However, state law outlines specific responsibilities. These include keeping accurate records of all transactions related to the trust, providing accountings to beneficiaries upon request or at specified intervals, investing trust assets prudently, avoiding conflicts of interest, and acting solely in the best interests of the beneficiaries.

Successors must also follow any instructions in the trust document regarding distributions, investments, or other matters.

A successor trustee must understand and follow these responsibilities diligently to avoid any potential legal issues down the line.

If multiple trustees are named in a trust document, they may serve together as co-trustees or have specific duties divided among them.

Trustee, Successor trustee, Co-trustee, Alternate successor trustee: What's The Difference?

When creating a trust, it is important to understand the roles and responsibilities of anyone in the role of trustee While these terms may sound similar, there are key differences that can impact how your trust is managed.

What Is A Trustee?

A trustee is appointed to manage and administer a trust on behalf of its beneficiaries. They have fiduciary duties to act in the beneficiaries' best interests and follow the trust document's terms.

The initial trustee is often the person or persons who created the trust, also known as the grantor.

A trustee has significant power over the assets within the trust, including investing those assets, distributing income and principal to beneficiaries, and making decisions about how the trust should be managed.

What Is A Successor Trustee, and How Does It Compare?

On the other hand, a successor trustee is someone named to take over if the original trustee is unable or unwilling to fulfill their duties. This could happen due to incapacity, death, resignation, or any other reason specified in the trust document.

The successor trustee often, but not always, steps into the role with all of the same powers and responsibilities as the original trustee.

A key responsibility of a successor trustee in Texas is ensuring that all actions taken on behalf of the trust follow state laws and regulations. This includes following proper procedures for distributing assets, filing required paperwork with relevant government agencies, and fulfilling any reporting requirements mandated by law.

Failure to adhere to these rules could result in legal consequences for the successor trustee and beneficiaries.

What Is An Alternate Successor Trustee?

An alternate successor trustee is a person or entity named to take over if both an original trustee and a named successor trustee cannot act.

It is good to have backup planning in case anything happens. Having at least one, if not several, successor trustees designated in your estate plan can provide peace of mind, knowing that someone can step into this important role if needed.

It also helps prevent delays or disputes among beneficiaries by clearly outlining who will take over as trustee in an emergency. By carefully selecting a trustworthy individual or professional fiduciary, you can ensure that your wishes are carried out effectively and efficiently.

Who Should I Choose As My Successor Trustee?

Anyone considering setting up a trust or serving as a trustee should understand these distinctions between trustees and successors.

When creating a trust, carefully consider who to appoint as successor trustee. This person should be trustworthy, responsible, organized, and capable of handling financial matters.

It can also be helpful to choose someone knowledgeable of trusts and estate planning laws or willing to seek guidance from professionals when needed.

By knowing who has what powers and responsibilities within a trust arrangement, all parties can ensure that assets are managed properly and beneficiaries are protected.

What is A Co-Trustee?

A co-trustee shares trustee responsibilities with one or more other individuals or entities.

While both trustees and co-trustees have similar duties and responsibilities, they differ in how decisions are made and carried out. Co-trustees can collaborate to make decisions regarding trust assets, investments, distributions, and other matters outlined in the trust document. Co-trustees usually have equal authority over the trust assets and decision-making power.

Co-trustees share responsibility for making decisions about the trust assets but may have different areas of expertise or focus within their roles. For example, one co-trustee might handle investment decisions while another oversees beneficiary distributions.

Your attorney can also guide you in selecting an appropriate successor trustee or co-trustee based on your circumstances.

Should you name a family member as your successor trustee?

When deciding whether to name a family member as your successor trustee, several factors must be considered. While having a family member serve as a trustee can bring a sense of familiarity and trust, it may also lead to conflicts of interest or strained relationships within the family.

Sometimes, naming a family member as your successor trustee can be beneficial. Family members may better understand your wishes and intentions than an outside professional. They may also be more invested in faithfully carrying out your wishes.

However, if family dynamics come into play, it's essential to consider any potential conflicts of interest. Family dynamics can significantly affect how well a family member can fulfill their duties as trustee. If there are conflicts or strained relationships within your family, naming a family member as your successor trustee may not be the best choice.

Also, successors have significant financial duties, such as investing trust assets, distributing income and principal to beneficiaries, filing tax returns, and keeping accurate records. Choosing someone trustworthy, organized, financially savvy, and willing to fulfill these duties is crucial.

While having a family member serve as trustee has benefits, it also has potential drawbacks that must be weighed carefully against other options, such as hiring an independent professional trustee.

Successor Trustee vs Executor - What's the Difference?

In Texas, successor trustees and executors have specific duties that must be carried out according to state law.

Successor Trustee:

A successor trustee is appointed to manage a trust set up during your lifetime. According to your instructions, this individual oversees the distribution of assets held in the trust. They have a fiduciary duty to act in the best interests of the beneficiaries and follow the terms outlined in the trust document.

A successor trustee steps into their role upon your incapacity or death and manages the trust until it is fully distributed.

Executor:

If you have a will, an executor is appointed to administer your estate in probate after you pass away.

Their responsibilities include gathering and managing assets, paying debts and taxes, and distributing property to beneficiaries as directed in your will. The executor's role typically ends once all debts are settled, taxes are paid, and assets are distributed according to your wishes.

An Important Key Difference:

One key difference between a successor trustee and an executor is when they come into play. A successor trustee manages a trust during your lifetime and after your passing, while an executor only acts after you have passed away if you have a will in place.

Additionally, a successor trustee's responsibilities are ongoing until all assets in the trust are distributed, whereas an executor's duties typically conclude once the estate has been settled.

I've Been Named As A Trustee, What Should I Do?

If you are unsure about your role as either a trustee or successor trustee in Texas, it may be wise to seek legal advice from an experienced estate planning attorney.

Get The Right Advice

Understanding the roles and responsibilities of trustees is crucial for anyone engaging in estate planning in Texas.

Understanding the roles of trustees, successor trustees, co-trustees, and alternates is essential for anyone managing or benefiting from a trust.

We Can Help: Contact Us Today At (281) 407-9830

Consulting with our estate planning firm can help you make informed choices that will protect your assets and ensure that your wishes are carried out according to your wishes.

Trusts can be complex legal instruments, but with proper planning and guidance from experts in Texas law, you can create peace of mind by knowing everything will be taken care of in case something happens down the line!