Once having created a Trust of your own (with the help of a qualified estate planning attorney, of course) you become the “Trustor”, or Creator/Settlor/Grantor of that Trust. If you are married, you and your spouse are both Trustors. You may also be the first Trustee of your Trust, but this role is quite different. Think, Employer/Employee – Trustor/Trustee. There is the one who created the job, Employer, and the one who does the job, Employee.
There is a clear beginning and end to each Trusteeship. The beginning happens when the Trust is first created, then each time a Successor Trustee moves into the Trustee role. The triggering events for this transition are incapacity, resignation, and death.
Incapacity – there is typically language in your Trust document which describes how incapacity will be determined; for instance, two physicians will examine you and each will write a letter stating that you are no longer capable of managing your own affairs. The resulting letters (along with a copy of your Trust, or a Trust Certification) are then presented to the financial institutions, and other entities, by your selected Trustee, so that all can be accounted for and transacted upon. You may, or may not, be fully aware of this transition when it happens.
Resignation – Different from incapacity, in that, you are choosing to have your Successor Trustee step up into the role of Trustee. A formal letter of resignation is typically prepared by your attorney, and your signature is notarized. This document is used just like the doctors’ letters, giving your Trustee authority over your assets. Your Trustee should provide you with financial reports (annually is normal) as the Trust is administered for your benefit, until you pass away, and then the Trust is administered for the benefit of your beneficiaries.
Death – Just like incapacity and resignation, the resulting document, the Death Certificate, is utilized to grant authority to your chosen Trustee.
We strongly recommend that you have not only three successors listed in your Trust, but also an effective mechanism to choose another Trustee, if none of the three you selected are able to serve you. Such mechanisms might include going to court to appoint a trustee, or allowing the last Trustee to select another. Please discuss your options with your attorney, so that the office of Trustee is never vacant.
We also recommend that the same individuals named to serve on your Trust are named in the same order as your Durable Power of Attorney, and your Will. You might also want them on your Advance Health Care Directive, which is fine, and also very important to discuss with your attorney.
Marguerite Lorenz, CTFA, CLPF is a Master Trustee and a Managing Partner at Lorenz Private Trustees (MyTrustee.net) and has served as a Trustee and Executor since 2003.