Living Trust

In Charge Of A Living Trust

There are many people involved in a living trust throughout the process. Learn here who these people are, as well as what their roles are.

A big concern with many people is who is in charge of a living trust. This is an important question to answer before creating your living trust. Originally, the trustee manages the living trust. In most cases you are the trustee until you are incapable and then the next person you designated will step in. But that person can’t step in until the requirements for them to do so, requirements spelled out in the trust, have been met.

Now that you have a better understanding of who is in charge of a living trust, it is a good idea to explain the different roles of the people who would be involved:

Trustor

Also known as a Grantor or Settlor, the Trustor is the person who sets up the trust...namely you. As the Trustor, you have full control to change or adjust the trust whenever it is necessary.

Trustee

This is the person who will manage all the assets in the trust for you. Usually you will do this yourself while you are still alive. When a trust is created, the Trustee is usually the same person as the Trustor. If you are married, both the husband and the wife usually act as Co-trustees. You don’t have to be your own trustee if you don’t want to be—you can name a child, a friend or even an institution to manage the trust on your behalf while you’re alive.

Successor Trustee

A Successor Trustee is the person who will manage your trust for you when you die or become incapacitated in some way. This person will have the right to manage your affairs without needing to go to probate court. As soon as you are not capable of handling your affairs for any reason, the Successor Trustee immediately has the power to buy, sell, borrow or transfer the assets inside the trust.

They also have the right to distribute the trust’s assets, according to your instructions. This immediate control makes it possible for your estate to be transferred to your heirs right away, without the delays of going through probate.

For your protection, the Successor Trustee doesn’t have the legal right to change your trust when you die—the trust becomes irrevocable or unchangeable after your death. However, the Successor Trustee does have the right to manage the assets in the estate, but only for the good of all the beneficiaries.

Beneficiaries

Beneficiaries are the people who will receive the assets in the trust after you die. A typical beneficiary would be your surviving spouse, but if there is no surviving spouse then the assets would go to the other people named in the trust. You can name anyone you choose to be a beneficiary—a child, a relative, a friend or a charity.

Executor

When you die, your executor takes on the legal responsibility of handling all the details outlined in your will. As executor of your will, they must assemble and value your estate’s assets, pay necessary taxes, distribute your estate assets to your beneficiaries and give a complete accounting of his or her actions with regards to everything done to carry out the terms of your will. Most importantly, the executor is responsible for the financial management of your estate assets while the terms of your will are carried out. In the situation of a living trust, this last will and testament is also called a pour-over will and the executor is many times the same person as successor trustee.

Guardian

A Guardian, or Conservator, is appointed when a court decides that you are not capable of making decisions for yourself any longer, for example if you are physically or mentally incapable of managing your affairs. This is the process where the court gets involved in the management of the estate when you are incapacitated. However, this process can be avoided by setting up a revocable living trust and deciding in advance who would manage your financial affairs if you were unable to do so.

So, you have the three primary people that are in charge at some point in a living trust: trustors, trustees and successor trustees, and then beneficiaries. It is important to appoint the best people for these positions so that, when the time comes, you can be assured that they will make responsible decisions in regards to your living trust.