One of the most important decisions you’ll make when creating your estate plan is choosing someone to manage your affairs if you become incapacitated or pass away. For many people, that means naming a spouse, adult child, sibling, or trusted friend. But what if you don’t have anyone who feels like the right choice?
Maybe you don’t have children, your relatives are getting older, or the people closest to you have their own challenges. Perhaps you have someone in mind, but they’ve already told you they aren’t comfortable taking on the responsibility. Or maybe you simply don’t trust anyone you know to manage your finances and carry out your wishes.
If you’ve been putting off your estate planning because you have no one to name as successor trustee, I want you to know that you have options. You don’t need to have this figured out before we begin planning, but we do need to find a workable solution.
Why This Decision Can Be More Complicated Than It Seems
When you create a revocable living trust, you will generally serve as your own trustee while you’re alive and capable of managing your affairs. Your successor trustee is the person or institution designated to step in when you can no longer serve, whether due to incapacity, death, or another circumstance specified in your trust.
Depending on your circumstances, that person may eventually be responsible for managing bank and investment accounts, maintaining or selling real estate, paying expenses, handling tax matters, and distributing assets according to your instructions.
It’s a significant responsibility, which is why I encourage clients to give this decision careful consideration. As I discussed in my earlier article, Who Should I Choose to Be Successor Trustee?, choosing someone who is trustworthy, responsible, and capable of carrying out your wishes is essential.
But being a family member or close friend doesn’t automatically make someone the right choice. And if you don’t have anyone suitable, that doesn’t mean you should settle for someone simply because they’re available.
You Don’t Have to Choose a Family Member or Friend
Many people assume their successor trustee must be someone they know personally. While that’s certainly one option, California law also allows qualified professionals and institutions to serve in this role.
For someone without close family support, naming an independent professional may provide greater peace of mind than relying on a reluctant friend or distant relative.
There are two options worth considering.
A Licensed Professional Fiduciary
California has professional fiduciaries who provide services such as trust administration, estate management, and financial oversight. These professionals are compensated for their work and assume legal responsibilities when serving as trustees.
A professional fiduciary may be a good fit if you want someone independent, need assistance managing particular assets, or don’t have family members who can reasonably take on the responsibility.
Professional fiduciaries are not all alike, however. Their experience, availability, services, and fees can vary considerably. Some may work with relatively straightforward trusts, while others have experience administering complex estates or managing property for beneficiaries who need ongoing financial support.
California regulates professional fiduciaries through the Professional Fiduciaries Bureau, subject to statutory licensing requirements and exemptions. You can verify a professional fiduciary’s license and review available disciplinary information before making a decision.
If you’re considering this option, I recommend meeting with potential fiduciaries to discuss your circumstances and determine whether they’re a good fit. I’ve also written about red flags to watch for when hiring a professional trustee.
A Bank or Trust Company
Another option is to appoint a bank with trust services or an independent trust company. These institutions may provide professional investment management, trust accounting, administration, and other services through an established team.
An institutional trustee may be appealing if you have substantial investments, a trust that will continue for many years, or concerns about depending on one individual who could retire, become ill, or otherwise be unable to serve.
However, banks and trust companies often have minimum asset requirements, and some will not administer trusts that contain certain types of real estate, closely held businesses, or other assets. Their fees and administrative policies also vary.
Before naming a bank or trust company, it’s important to confirm that the institution is willing to accept the appointment and that your trust meets its requirements. Simply naming an institution in your documents doesn’t guarantee that it will agree to serve when the time comes.
What If Someone You Trust Is Hesitant to Serve?
Sometimes there actually is someone you would feel comfortable naming, but that person is reluctant because they don’t understand what serving as trustee involves.
For example, a close friend may be perfectly capable of handling important decisions but worry about managing investments, preparing tax returns, or dealing with legal requirements. Those concerns are understandable, particularly if they’ve never served as a trustee before.
What many people don’t realize is that trustees can generally hire professionals to assist with appropriate tasks. An attorney can provide legal guidance, an accountant can handle tax matters, and a financial advisor can assist with investments. The trustee still has fiduciary responsibilities and must exercise appropriate care, but that doesn’t mean they need to possess every professional skill themselves.
It’s worth having an honest conversation to understand the person’s concerns. Someone who is hesitant because of unfamiliarity with the role may feel differently after learning what would be expected and what support would be available.
On the other hand, if someone simply doesn’t want the responsibility, I would respect that decision. Naming an unwilling trustee can create problems for everyone involved, particularly if that person ultimately declines to serve when they’re needed.
What Happens If No Successor Trustee Is Available?
This is one reason I strongly encourage people to address the issue while they’re still able to make their own decisions.
Under California Probate Code Section 15660, when a trust has no trustee, the trust’s provisions generally determine how the vacancy should be filled. If the trust doesn’t provide a workable method, California law allows certain other procedures, including an agreement among specified beneficiaries to appoint a willing trust company. If those methods are unavailable or unsuccessful, court intervention may become necessary.
That can mean additional delays, legal expenses, and uncertainty at a time when your family or beneficiaries may already be dealing with difficult circumstances.
A thoughtfully prepared trust can include backup appointments and provisions addressing how a replacement trustee may be selected if your original choices cannot serve.
If you already have an estate plan, I encourage you to review the people and institutions you’ve named. Someone who was an excellent choice ten years ago may no longer be willing or able to serve today. A trust that worked well when it was signed may need to be updated as your relationships and circumstances change.
Your Successor Trustee Is Only Part of the Picture
If you don’t have anyone to name as successor trustee, there’s another important conversation we should have: Who will help make decisions for you if you’re alive but unable to manage your affairs?
Your trustee generally handles assets held in your trust. A durable power of attorney can authorize someone to handle financial matters outside your trust, while an Advance Health Care Directive allows you to designate someone to make medical decisions if you cannot make them yourself.
These are different roles, and the same person doesn’t necessarily need to fill all of them. In fact, someone who would be an excellent healthcare decision-maker might not be the right person to manage your investments or administer your estate.
When we create your Life & Legacy Plan, we consider these responsibilities together. If you don’t have family members or friends who can fill the traditional roles, we can explore appropriate alternatives rather than leaving important decisions unaddressed.
You Can Begin Planning Even If You Don’t Have All the Answers
One of the things I want people to understand is that you don’t need to arrive at your first estate planning meeting with every decision already made. Figuring out who should serve in these important roles is part of the planning process.
At Cheever Law, I take the time to understand your relationships, assets, concerns, and what matters most to you. If you don’t have an obvious successor trustee, we’ll discuss the available options, the responsibilities involved, and what would make the most sense for your particular circumstances.
We can also look at the practical details, such as whether a professional fiduciary would be appropriate, what services you might need, and how your trust should address the possibility that a named successor becomes unavailable.
The important thing is to begin the conversation while you still have the opportunity to make these choices yourself.
Let’s Create a Plan That Works for You
Whether you have a large family, a small circle of friends, or no close relatives at all, your estate plan should reflect your life and the people and circumstances that matter to you.
You shouldn’t feel pressured to name someone simply to complete your documents, and you shouldn’t have to postpone planning because you don’t know whom to choose. With the right guidance, we can work through these decisions and develop a plan that provides the protection and peace of mind you’re looking for.
At Cheever Law, my Life & Legacy Planning approach is about much more than preparing legal documents. It’s about helping you make informed decisions today so your wishes can be carried out and the people who may need to help you in the future know what to do.
If you’re struggling with whom to name as successor trustee, I invite you to schedule a complimentary 15-minute introductory call. Let’s talk about your concerns and how we can create an estate plan that works for you.