What should I do if my chosen successor trustee dies before me?
If the successor trustee of your revocable living trust (RLT) dies before you, nothing will happen immediately with respect to how your trust is managed. If you named a backup to your successor trustee in your trust document, it is important that you speak to that person and reconfirm that your chosen backup is still willing to serve as your trustee when the time comes. Because this person was the backup to your successor, this person may have assumed that he or she would never actually have to act.
It is important to note that because the trust is revocable, you can name a new successor trustee—your backup does not necessarily have to move ahead in line. If you choose to revise your trust document, it is advisable that you name not only a successor trustee but also a backup to your successor trustee to ensure that there is always someone available to step in no matter what happens. As always, it is vital to discuss this selection with the person you have chosen before you finalize your documents to make sure that this person will act when the time comes.
If you pass away and no one is able to serve as trustee, your beneficiaries will need to look to your trust agreement for guidance to fill this vacancy. Your trust might provide that a certain number of your beneficiaries can appoint a new trustee without court involvement. Or your trust might require that the court approve any potential trustee. The outcome will depend upon the wording of your trust and your state’s laws.
What should I do if my child dies before me?
Many parents’ estate plans leave some or all of their accounts and property to their children. If your child passes away before you, review your Will and your RLT to see what you were planning to leave to your child.
If your child was going to receive something, check your will or RLT to see if these documents address who will receive the money and property if your child passes away before you. If you have already planned for this contingency, the next person in line will receive the accounts and property. Even if you have a plan in place, review the plan and your documents to ensure that they still reflect your wishes. A lot can happen in a few years, so it is always good to remind yourself what your documents dictate. If your documents do not provide for a backup recipient, update your documents to reflect who should receive these accounts and property.
Also, check any accounts or pieces of property you own to see if your child was named as an owner, or as a beneficiary through a beneficiary designation, transfer-on-death designation, or pay-on-death designation.
In addition to reviewing your estate planning documents to identify any money or property your child was going to inherit, check to see if you named your child as one of your trusted decision-makers (personal representative, co-trustee or successor trustee, agent under a financial power of attorney, or agent under a medical power of attorney). A vacancy in one of these important roles may require additional court involvement, which can cost your family time and money, as well as a loss of privacy. It’s much easier and cheaper to amend your estate planning documents while you are still alive, then to leave decisions to the courts after you are gone.
My spouse just died. What estate planning concerns do I need to address?
You and your spouse probably owned some, if not all, of your accounts and property jointly. This may have been because you acquired the money and property during your marriage. Or, it may be because you decided to own them jointly, with rights of survivorship.
While joint ownership allowed you to avoid probate after the death of your spouse, you now own the accounts and property individually, and they will now be subject to probate at your death. That is, unless you amend your estate plan. If avoiding probate is a priority for you, we would be happy to meet with you to discuss the various options available.
Because most married couples automatically list their spouse as the beneficiary of their life insurance and retirement accounts, we can also review those beneficiary designations and advise you on your options for leaving these accounts to other individuals.
Last, as discussed above in regard to your children, review your selections for your trusted decision-makers. Because of the close relationship you shared with your spouse, you likely named your spouse to serve in one or all of the following roles:
- personal representative under your last will and testament
- co-trustee or successor trustee of your RLT
- agent under your financial power of attorney
- agent under your medical power of attorney
If you still have minor children, you will also need to consider who should serve as your children’s guardian if you are unable to care for them.
Give attorney Mark Tebelius a call at (651-738-3433) to discuss these and other important estate-planning issues.