Assigning a Trustee

When you are naming your successor trustees, you need to ask yourself whether the successor trustee you are considering will be capable, or even alive, to serve. You might want to revisit Chapter 13 to review the information about choosing a trustee.

ARTICLE VI TRUSTEE

6.1 Trustee While JANE ADAMS DOE Is Living. I hereby appoint myself, JANE ADAMS DOE, as Trustee.

Article 6.1 names Jane as her own trustee. You will probably name yourself as initial trustee as well.

6.2 Trustee If JANE ADAMS DOE Is Not Living.

6.2(a) Trustee If My Spouse, JOHN ALEXANDER DOE, Is Living. If JANE ADAMS DOE is not living or is not capable of serving, I hereby appoint my husband, JOHN ALEXANDER DOE, to serve as trustee.

Article 6.2(a) names the successor trustee after Jane is gone or not capable of serving. Jane named her husband, John, as the first successor trustee. If Jane is dead, John will pay all of the debts and any taxes, and then he will distribute the remaining property to his trust.

6.2(b) Trustee If JANE ADAMS DOE and JOHN ALEXANDER DOE Are Not Living. If JANE ADAMS DOE and JOHN ALEXANDER DOE are not living, I hereby appoint ABC BANK to serve as Trustee of any trusts created for the benefit of my children, JACK JOSEPH DOE, JAMIE ANN DOE, or the children of JACK JOSEPH or JAMIE ANN DOE.

Article 6.2(b) names a successor trustee to serve if both Jane and John are gone or not capable of serving. Jane named a bank as successor trustee when John is gone or not available to serve. She might have chosen a bank because she knew the trust was going to be in place for a long time and didn't want to worry about who would serve as successor trustee for Jack and Jamie or for their children if either of them died before receiving his or her full trust distribution.

If this were your trust, you might have named Jamie as successor trustee for Jack's trust and Jack as successor trustee for Jamie's trust. You might feel uncomfortable about a bank making decisions for your children or grandchildren. Again, the choices you make depend on what you think is best for your family.

6.3 Fees. The Trustee shall be compensated a reasonable fee for serving as Trustee. The Trustee shall also be reimbursed for all expenses and charges incurred in the performance of its duties or by reason of its office as Trustee.

6.4 Disabled Trustee. A Trustee is “disabled” (and while disabled shall not serve as Trustee) if the next successor trustee receives written certification that the examined trustee is physically or mentally incapable of managing the affairs of the trust, whether or not there is an adjudication of the trustee's incompetence.

6.4(a) Certification of Disability. This certification shall be valid only if it is signed by at least two (2) physicians, each of whom has personally examined the trustee and at least one (1) of whom is board-certified in the specialty most closely associated with the alleged disability. This certification need not indicate any cause for the trustee's disability. A certification of disability shall be rescinded when a serving trustee receives a certification that the former trustee is capable of managing the trust's affairs. This certification, too, shall be valid only if it is signed by at least two (2) physicians, each of whom has personally examined the trustee and at least one (1) of whom is board-certified in the specialty most closely associated with the former disability.

6.4(b) Reliance on Certification. No person is liable to anyone for actions taken in reliance on the certification under this paragraph, or for dealing with a Trustee other than the one removed for disability based on these certifications.

Article 6.4 puts a plan in the document in the event that any trustee becomes incapacitated. This is an important provision because without a way to certify a trustee's disability, if Jane became disabled, John would have to have Jane declared judicially incompetent in order to serve as successor trustee. This is a very expensive and cumbersome process that can be avoided by including a process in the trust document to have a trustee removed in the event that she becomes disabled and unable to serve.

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