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6 Mistakes Successor Trustees Make and How to Prevent Them

Being named as successor trustee is a big responsibility that comes with legal and fiduciary duties. It means you’re in charge of managing someone’s trust after they pass away or become incapacitated. While it may seem straightforward at first, there are several dangerous mistakes that successor trustees can make if they’re not careful. In this post, we’ll explore these problems so you can avoid them and administer the trust smoothly. 

Six Common Mistakes Made by Successor Trustees

1: Not Taking the Role Seriously

One of the biggest mistakes a successor trustee can make is not fully understanding the gravity of their role. You cannot simply do what you want, when you want. The typical duties of the successor trustee include:

  • Administering the trust according to its exact terms
  • Acting in the best interests of the beneficiaries
  • Keeping the beneficiaries informed
  • Making financial decisions, like how to invest the assets if necessary
  • Paying property or income taxes 
  • Keeping an accurate accounting record

Failing to take these responsibilities seriously can lead to adverse consequences, including legal liabilities. If you’re considering naming someone as your successor trustee, it’s important to discuss the role with them ahead of time so they will know what to expect. And if you’re administering a trust yourself, make sure to consult an estate planning attorney who can help you understand and carry out your duties. 

2: Not Reading the Trust Document

Even if you’ve already administered a trust before or done your research online, it’s still crucial that you read the trust document. Every trust is unique, with specific instructions laid out by the grantor. One trust might be administered in six months, while another might take years because the trustee has to manage the assets until the beneficiary turns 18. Familiarize yourself with the terms of the trust to ensure you will be able to fulfill your duties correctly. 

3: Poor Record Keeping

Transparency and accountability are crucial when it comes to administering a trust. You’ll need to keep detailed and accurate records of all transactions, communications, and decisions related to the trust. This may include records of the value of the assets, bank statements, and tax returns. Failing to maintain proper records can lead to confusion, disputes, and legal challenges down the line. 

4: Failing to Communicate with the Beneficiaries

Communication is key in trust administration. Some trustees fail to relay updates to the trust’s beneficiaries, or even ignore their attempts at communication. However, it is your duty as trustee to keep beneficiaries informed about the status of the trust and any significant decisions or changes. Addressing their concerns in a timely manner will mitigate any potential conflicts. 

5: Procrastinating or Delaying Important Decisions

Feeling overwhelmed by their responsibilities often causes successor trustees to delay important decisions. However, timely action is essential to efficiently manage the trust and avoid problems down the road. As trustee, you’ll need to secure the trust’s assets and gather any necessary information like appraisal info as soon as possible. If a beneficiary has any questions or concerns, always respond promptly.

6: Not Working with a Professional

Finally, don’t make the mistake of trying to handle it all on your own. Trust administration can get quite complicated, especially if managing the trust involves overseeing assets like real estate. Working with an experienced estate planning professional can help you navigate the process more effectively and avoid costly mistakes.  

Estate Planning Guidance in the Phoenix Valley

Whether you need help with administering a trust or creating your own estate plan, contact the Phelps LaClair team. Our experienced attorneys can assist you with everything from distributing a loved one’s assets to writing your will. Give us a call today to schedule an appointment in Mesa, Surprise, Glendale, or one of our other offices in the Phoenix area. 


Images used under creative commons license – commercial use (3/20/2024). Photo by SEO Galaxy on Unsplash

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