What Happens if the Trustee Dies Before the Trustor?

When you made your trust, you made sure to do it right. You signed it in front of a notary and witnesses. You named the trustee and beneficiaries. You also funded it. But did you consider what happens if the trustee dies? Your trust could end up in court if it doesn’t have a trustee. The good news is you can name successor trustees in the trust document.

This article explains what happens when a trustee dies. Trust laws are complex and vary by state. An experienced estate planning attorney in your area can explain your state’s laws. They can also give you legal advice about your situation.

What Is a Trust?

Trusts can be an essential part of your estate plan. You can use one type of trust to pass property to your loved ones outside of probate. Other types of trusts can lower your estate taxes and protect assets.

A trust is a legal entity that holds property for the benefit of a third party. When you make a trust, you’re the trustor. Grantor and settlor are other terms for trustor. You transfer property to the trust. These become the trust assets.

The person who manages the trust is the trustee. The trust beneficiaries benefit from the trust. Beneficiaries are often your family members but can be anyone. You can also make charities beneficiaries.

What Happens When a Trustee Dies?

It’s best to name someone in the trust agreement to manage the trust when a trustee dies or steps down. You can do this in two ways: naming a successor trustee or having a co-trustee.

A successor trustee steps into the trustee’s shoes when the trustee stops managing the trust. They only control the trust assets once they become the trustee. You can name more than one successor trustee in case your successor trustee dies or doesn’t want to serve.

The grantor is often the trustee in a revocable living trust (RLT). Many people use this type of trust to pass property on to their family after they die. The advantage of an RLT is that the estate can avoid the lengthy and costly probate process. So if this is the type of trust you set up, the successor trustee takes over upon your death. They become responsible for distributing the trust property to the beneficiaries of the trust. When that’s done, the trust terminates.

Another type of trust is an irrevocable trust. People often use this type of trust for asset protection and tax benefits. Generally, the grantor is not the trustee of an irrevocable trust. In this case, the grantor’s death doesn’t cause a change of trustee. But, like a revocable trust, the successor trustee will take over if the trustee dies.

Some trusts have co-trustees. Co-trustees are trustees who manage the trust together. When a co-trustee dies, the remaining co-trustee often becomes the sole trustee. For example, suppose you and your spouse are co-trustees of your joint revocable trust. If you die, your wife becomes the trustee.

What Happens if There’s No Successor or Co-trustee?

The probate court will appoint a trustee if you don’t name a successor in the terms of the trust. The beneficiaries can ask the court to select a specific person, but the court isn’t obligated to do so.

A trust can exist for a long time. It may be hard to name enough successor trustees to ensure there’s always a trustee. You can hire a professional trustee to help keep your trust out of court. A professional trustee is a trust company or the trust department of a bank. The advantage is that the bank or trust company can assign a new person to administer your trust when necessary.

Another option is to include a provision for naming new successor trustees. For example, you can allow the beneficiaries to name a new trustee.

Contact an Estate Planning Attorney for Help

The trustee has an important role when it comes to trusts. They manage the trust property and make disbursements to beneficiaries. When a trustee dies, the terms of the trust say what happens. But things can get complex if the trust doesn’t include those instructions. An experienced trusts lawyer can help keep your trust out of court.