How does one prove they are Successor Trustee?

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roamingzebra
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How does one prove they are Successor Trustee?

Post by roamingzebra »

Say a couple has a family trust and it is understood that after the second death, the sole heir is the successor Trustee -- JOHN DOE in this case. One would think the sucessor Trustee would be explicitly named in the trust, but what if the language is a little more vague? Something along the lines of:

"Upon the death of both husband and wife, the successor Trustee shall be such person or bank as is the serving as co-trustee, or if none, such person or bank as husband or wife hereafter appoints as successor Trustee, or if none, JOHN DOE."

IOW, JOHN DOE is last in line after some generic, unnamed parties.

How is a bank or financial institution going to know that JOHN DOE is the successor Trustee as opposed to some bank or some other person? Does the successor Trustee have to have an affadavit stating they are successor Trustee? Does it have to be drawn up by a lawyer? Does the successor Trustee have to hand over a copy of the trust document to the bank or financial institution (even though living trusts are supposed to be private?)
Bobby206
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Re: How does one prove they are Successor Trustee?

Post by Bobby206 »

roamingzebra wrote: Sun Apr 25, 2021 9:40 pm Say a couple has a family trust and it is understood that after the second death, the sole heir is the successor Trustee -- JOHN DOE in this case. One would think the sucessor Trustee would be explicitly named in the trust, but what if the language is a little more vague? Something along the lines of:

"Upon the death of both husband and wife, the successor Trustee shall be such person or bank as is the serving as co-trustee, or if none, such person or bank as husband or wife hereafter appoints as successor Trustee, or if none, JOHN DOE."

IOW, JOHN DOE is last in line after some generic, unnamed parties.

How is a bank or financial institution going to know that JOHN DOE is the successor Trustee as opposed to some bank or some other person? Does the successor Trustee have to have an affadavit stating they are successor Trustee? Does it have to be drawn up by a lawyer? Does the successor Trustee have to hand over a copy of the trust document to the bank or financial institution (even though living trusts are supposed to be private?)
Different banks will require different but typically a certified extract of trust and an acceptance of successor trustee signed by John should be fine. Attorney drafted probably helps but is not required in any state that I know of. Also death certs likely needed. Also, most banks will ask for a copy of the trust but not all. It's private means it's not a public record in probate court. Good luck.
fourwheelcycle
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Re: How does one prove they are Successor Trustee?

Post by fourwheelcycle »

If I was John Doe I would try to make sure the couple or the surviving spouse formally appointed me as a co-trustee before they died. My wife and I have a joint revocable trust that holds all of our taxable savings. One of our adult children is named as the successor trustee. That child is also our DPOA for finances and executor of our pour-over wills. We plan to name that child as an active trustee if we need assistance managing our finances when we get older, and to name them as an active trustee before we die in any event so they will already be known and recognized by our bank and our broker (Vanguard) when the second of us dies.
Lee_WSP
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Re: How does one prove they are Successor Trustee?

Post by Lee_WSP »

roamingzebra wrote: Sun Apr 25, 2021 9:40 pm
How is a bank or financial institution going to know that JOHN DOE is the successor Trustee as opposed to some bank or some other person? Does the successor Trustee have to have an affadavit stating they are successor Trustee? Does it have to be drawn up by a lawyer? Does the successor Trustee have to hand over a copy of the trust document to the bank or financial institution (even though living trusts are supposed to be private?)
Because you’ve shared with the back the trust document and associated appointments. How else would it work? They typically make you share it when you re title the accounts. It’s private in that it’s not viewable by the public like a will, but the bank needs to know.
johnnyc321
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Re: How does one prove they are Successor Trustee?

Post by johnnyc321 »

That’s a very poorly drafted trust.
afan
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Re: How does one prove they are Successor Trustee?

Post by afan »

Include some information about John Doe, to make it a specific person. Like include their relationship, if any, to the grantor and their address.

Doe then needs to provide proof of who they are-say a driver's license.
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Topic Author
roamingzebra
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Re: How does one prove they are Successor Trustee?

Post by roamingzebra »

Thanks all.

After hearing your thoughts, I think the best course of action is for John Doe to have it clarified in the trust that he is the successor Trustee and also an active Trustee... Along with specifying information like relationship and possibly address, though the latter is more perisable. That, along with providing death certificates, should make any bank happy as a first step, and maybe is enough overall. All good ideas, thank-you.

The trust was drafted a long time ago when John wasn't entirely enthused about being a successor Trustee, but that has changed. That explains why the language sounds so conditional.

I realize now that the word "private" means something different than I originally thought.
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celia
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Re: How does one prove they are Successor Trustee?

Post by celia »

roamingzebra wrote: Mon Apr 26, 2021 9:21 pm After hearing your thoughts, I think the best course of action is for John Doe to have it clarified in the trust that he is the successor Trustee and also an active Trustee...
How can John Doe be first in line (active Trustee) and next in line (Successor Trustee)? This would be like you standing in line at the store and also behind yourself.

There should be a separate section in the trust that talks about who the trustees would be and the order of succession, should the above-listed persons be unable to serve. There should also be a section saying what powers the trustee is granted, such as the power to buy and sell property or the power to act on trust financial accounts.

Only the Trustors (your parents who created the trust and funded it) can amend the trust. If they have both died, the trust becomes Irrevocable (unable to be amended).

They need a better lawyer, too, preferably someone who is an estate planning lawyer.
fourwheelcycle
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Re: How does one prove they are Successor Trustee?

Post by fourwheelcycle »

celia wrote: Mon Apr 26, 2021 10:53 pm How can John Doe be [an active Trustee] and next in line (Successor Trustee)? This would be like you standing in line at the store and also behind yourself.
This is an interesting point. Our JRT names a specific adult child of ours as the successor trustee. Our JRT says the successor trustee will become trustee if we have both died, resigned, or become disabled. However, we (or the survivor of us) intend to appoint our successor trustee as an active trustee if we need assistance managing our finances, selling our home, etc., before we die, without formally resigning or having ourselves legally declared to be disabled. We also intend to appoint our successor trustee (who is also our DPOA for finances), as an active trustee when we get older, even if we do not need assistance, just so our successor will be recognized as a current trustee by our bank (BoA) and our broker (Vanguard) and have their own log-in to our JRT's accounts, with full transaction rights, before we die. Our JRT does not explicitly say we can do this, but it does say we can amend the JRT at any time before we die.

In order to distribute the JRT's assets, our successor trustee will still have to submit our death certificates (or copies) and get an EIN for the JRT from the IRS when we die.
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celia
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Re: How does one prove they are Successor Trustee?

Post by celia »

fourwheelcycle wrote: Tue Apr 27, 2021 8:24 am Our JRT names a specific adult child of ours as the successor trustee. Our JRT says the successor trustee will become trustee if we have both died, resigned, or become disabled. However, we (or the survivor of us) intend to appoint our successor trustee as an active trustee if we need assistance managing our finances, selling our home, etc., before we die, without formally resigning or having ourselves legally declared to be disabled. We also intend to appoint our successor trustee (who is also our DPOA for finances), as an active trustee when we get older, even if we do not need assistance, just so our successor will be recognized as a current trustee by our bank (BoA) and our broker (Vanguard) and have their own log-in to our JRT's accounts, with full transaction rights, before we die. Our JRT does not explicitly say we can do this, but it does say we can amend the JRT at any time before we die.
This is somewhat common and is accomplished by the original trustee(s) amending the trust to have a third co-trustee. The amendment could also limit the powers of the third trustee, if desired. We plan to "activate" one of our kids to be a co-trustee by the time we are 90. :wink: God willing.
In order to distribute the JRT's assets, our successor trustee will still have to submit our death certificates (or copies) and get an EIN for the JRT from the IRS when we die.
Except that the trust is then Irrevocable.
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roamingzebra
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Re: How does one prove they are Successor Trustee?

Post by roamingzebra »

celia wrote: Mon Apr 26, 2021 10:53 pm How can John Doe be first in line (active Trustee) and next in line (Successor Trustee)? This would be like you standing in line at the store and also behind yourself.
I hear what you're saying, but for clarity, the trust was set up by the parents. The father then passed leaving the mother as sole Trustee. The mother has no knowlege or interest in financial matters so her name on the trust is just window dressing. So, all things being equal, having the son, John Doe, as co-Trustee would make sense IF a qualification of a Trustee is that they have some knowledge of financial matters and are willing to carry out the responsibilities of co-Trustee.
Lee_WSP
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Re: How does one prove they are Successor Trustee?

Post by Lee_WSP »

roamingzebra wrote: Tue Apr 27, 2021 9:46 pm
celia wrote: Mon Apr 26, 2021 10:53 pm How can John Doe be first in line (active Trustee) and next in line (Successor Trustee)? This would be like you standing in line at the store and also behind yourself.
I hear what you're saying, but for clarity, the trust was set up by the parents. The father then passed leaving the mother as sole Trustee. The mother has no knowlege or interest in financial matters so her name on the trust is just window dressing. So, all things being equal, having the son, John Doe, as co-Trustee would make sense IF a qualification of a Trustee is that they have some knowledge of financial matters and are willing to carry out the responsibilities of co-Trustee.
If she's still alive, just have her resign and appoint son as successor trustee.
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celia
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Re: How does one prove they are Successor Trustee?

Post by celia »

roamingzebra wrote: Tue Apr 27, 2021 9:46 pm So, all things being equal, having the son, John Doe, as co-Trustee would make sense IF a qualification of a Trustee is that they have some knowledge of financial matters and are willing to carry out the responsibilities of co-Trustee.
Note that there are NO qualification rules for anyone to be selected as a trustee or not, unless the trust specifies some qualifications. The trustor could chose someone who doesn't know what a dollar is and is too busy to be a trustee. That's why there should be a "short list" of successor trustees. Or the sole successor trustee could die before the second parent dies.
fourwheelcycle
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Re: How does one prove they are Successor Trustee?

Post by fourwheelcycle »

Lee_WSP wrote: Tue Apr 27, 2021 10:36 pm If she's still alive, just have her resign and appoint son as successor trustee.
If I die first, I doubt my wife would resign in order to move our successor trustee child to trustee. I had never realized it until I began to follow this thread, but our JRT does not provide for us to appoint a third trustee. I now realize we will need to amend our JRT to enable us to appoint our successor trustee as a co-trustee before we die. It appears to be a very straightforward amendment that we can do ourselves with notarized signatures.

Although our successor trustee child manages their own finances and taxes very well, they have no interest, at this time in their early family life, to learn anything about the details of our finances. I also had no interest in the details of my parents' finances, or my own retirement planning, when I was in my thirties. Hopefully, when we get older our successor trustee will be more interested in long-term financial planning and it will be a good time to bring them "into" our finances in preparation for the time they may need to help us or, for sure, manage our final taxes and the distribution of our estate when we die.
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theac
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Re: How does one prove they are Successor Trustee?

Post by theac »

afan wrote: Mon Apr 26, 2021 6:21 am Include some information about John Doe, to make it a specific person. Like include their relationship, if any, to the grantor and their address.

Doe then needs to provide proof of who they are-say a driver's license.
I would think you would want to list their name, their relationship to the grantor,
and as an added bonus include their SS# that will not be changing
like an address or phone number could. It will remain unchanged their entire life.

Surely with an SS# as an identifier they will not only be easy to find,
but it verifies that this is the person you have listed in your Trust.
"We keep you alive to serve this ship. Row well...and live." Ben Hur...and The Taxman! hahaha
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