The successor trustee who was never asked

Naming someone successor trustee does not make them one. A couple signs a revocable trust and names their older daughter on page fourteen. She is not in the room and nobody has asked her. Under the Uniform Trust Code she holds the job only once she accepts it, and she is free to turn it down.

Page fourteen

Say nobody asks her. Four years pass, both parents die within eight months of each other, and she learns she was named from the attorney handling the estate, in the same conversation where she learns what the job involves. She has a full-time job in another state and two children at home.

She can accept, she can decline, or she can sit with it, and she has to decide in the weeks after her mother’s funeral. Under the uniform act, sitting with it long enough counts as declining: someone who does not accept within a reasonable time after learning of the designation is treated as having rejected the job. The official comment ties what counts as reasonable to the facts of the particular case, and singles out the harm that can follow from leaving the seat unfilled.

She can decline without breaking anything. A rejection creates a vacancy in the trusteeship, and the comment says plainly that it does not cause the trust to fail. What it costs is weeks the family does not have, and a phone call at the draft review would have cost thirty seconds.

The question at the draft review

Ask it before the signing, at the meeting where the household reviews the draft: does the person you named as successor trustee know, and have they agreed to serve. It asks what is true. It does not ask the household who they ought to name.

If the household asks what happens when she says no, the sequence is short. The trust document’s own successor clause governs first. Where the document is silent, the uniform act fills a vacancy in this order: whoever the document names next, then a person the qualified beneficiaries unanimously agree on, then a person the court appoints. Qualified beneficiary is narrower than it sounds. It covers the people currently entitled or eligible to receive income or principal, plus those who would take if the interests ahead of them ended that day. Getting every one of those people to sign the same appointment takes a signature from each of them, which is the step that stalls in families already in conflict.

The Uniform Trust Code is a model act. Each state enacts its own version, and the terms of a particular trust come first in any event, so the document on the table is the first thing to read.

The four answers

In the household that named someone and never told her, nothing has gone wrong yet. The document is carrying an assumption, and one phone call tests it.

What she takes on if she says yes

Her duties start the day she accepts. A trustee administers the trust in good faith, according to its terms, and in the interests of the beneficiaries.

Under the uniform act she has 60 days after accepting to notify the qualified beneficiaries that she has accepted and to give them her name, address and telephone number. At least annually she sends a report to the beneficiaries then receiving distributions, and to any other beneficiary who asks for one. That report covers trust property, liabilities, receipts and disbursements, and it includes the source and amount of what she paid herself.

How much of that a document can switch off depends on whether the trust is still revocable. While the parents are alive and the trust is still revocable, they can waive all reporting to the children. Once both parents have died the trust is irrevocable, and the uniform act makes two duties non-waivable: telling qualified beneficiaries aged 25 and over that the trust exists, who the trustee is, and that they can request reports; and answering a beneficiary who requests one. Enactments vary here, so the version that governs a particular family is the one their state passed.

Ending the job is straightforward. She resigns by giving the qualified beneficiaries at least 30 days’ notice, along with the settlor if living and any cotrustees, and she does not need a court; the drafters wrote the comment specifically to reject the old rule that a trustee needed a judge’s permission. Resigning does not discharge her liability for what she already did or failed to do while serving.

Her personal exposure is bounded and it has conditions. She is not personally liable on a contract she signs for the trust if she entered it properly in her capacity as trustee and the contract itself disclosed that capacity. A contract she signs in her own name is her own contract. For torts committed while administering the trust, she is personally liable only if she was personally at fault.

She can also hand most of the work to someone else. A trustee may delegate what a prudent trustee could properly delegate in the circumstances, exercising reasonable care in selecting the agent, in setting the scope and terms of the delegation, and in reviewing the agent’s performance. A trustee who does all three is not liable to the beneficiaries for what the agent does. The daughter who says she does not manage money for a living can hold the office and still have the portfolio managed by someone who does.

Helping before deciding

A daughter who steps in to help can take the job without meaning to. Where the trust document sets out no method of acceptance, or does not make its method the only one, she accepts by taking the trust property, exercising a trustee’s powers, performing a trustee’s duties, or otherwise indicating that she has accepted. Keeping the house insured in the week after the funeral can count as indicating acceptance.

The uniform act gives her a way to act first and decide afterward. She may act to preserve trust property without accepting, provided that within a reasonable time she sends a rejection to the person who created the trust, or to a qualified beneficiary if that person has died or lost capacity. She may also inspect or investigate the property without that counting as acceptance. The rejection has to actually be sent.

What the advisor does

• Ask at the draft review. "Does the person you named as successor trustee know, and have they agreed to serve?" That is a question about what is true, and the household answers it.
• Send the household something to hand the person they named. The successor trustee guide covers the role from her side.
• Route the legal questions out. Whether a particular person should serve, and what accepting would mean for her, go to counsel licensed where the household lives.
• Put the question on the annual review agenda. A yes given at the last plan was given against the facts as they stood then, and re-asking costs one line in a meeting already on the calendar.

The household decides who to name, the questionnaire records the choice, and the advisor coordinates what follows. The same boundary governs what an advisor can and cannot say about a client’s documents.

How Bancroft handles it

The conversation belongs to the advisor. What Bancroft changes is what it costs to act on the answer.

Amendments and restatements are free on every Bancroft plan, with no annual cap. A household that hears "I would rather not" at the draft review changes a name before anything is signed, which costs nothing on any platform. A household that hears it two years later, on a platform that bills per amendment, is weighing the correction against a fee.

The household’s people are captured once in the Important People record and pre-populate the questionnaires that follow, so nobody is re-keying names into each document. Bancroft starts at $299 a month for a solo or small practice, with no per-document fees on any plan. The funding meeting is the natural place to bring the named person and the advisor together, once the name has been confirmed.

Take the next trust signing on the calendar and ask a week ahead: does the person named as successor trustee know, and have they agreed to serve. If the answer is no or unclear, the fix before signing is a conversation and one field in the questionnaire. After signing it is a conversation and an amendment.