How to Become a Trustee

April 20, 2021

Becoming a Trustee

In this first video of module two of our Trust 101 Series, we’re talking about how do I become a trustee? And if you remember from our prior videos on what a trustee does or what a trustee is, there’s a guarantor of the trust that put their stuff in the trust. There’s the trustee that holds the assets while they are in the trust, and then the beneficiary that receives the benefit of the assets, that’s the income or the distributions from the trust.

In the trust document itself, you can be nominated and named as a successor or a backup trustee.

That’s the first clue that you’re a trustee, is somebody has written your name in there as a backup trustee.

So as a backup in order to be sort of moved into or installed in that first trustee role, the acting trustee role, the prior trustee has to either resign or be removed because they maybe were incapacitated, tied, resigned, and said, I don’t want to do it anymore. Something has to happen to that prior trustee before we are installed as the backup, the successor trustee.

Formal Process

It’s really important that if you’re the nominated trustee of a trust, that you follow the formal process of being installed as the trustee of the trust before you take possession or custody of any assets, it is possible to function sort of constructively as a trustee if you start taking possession or custody of assets even before the formal process has been followed.

Remember, if you’re the nominated trustee in a trust, it doesn’t automatically make you the legal formal trustee. And so you want to follow that formal process. What is the formal process? Well, first of all, we need to document the prior trustee’s exit as a trustee. And that usually comes in the form of a doctor’s letter that certifies in writing that they’ve examined the prior trustee, then they can’t make their own financial decisions anymore. So you have a Letter of Incapacity that would show that the prior trustee is no longer able to be the trustee.

You could have a death certificate from the prior trustee that they died, and they obviously can’t serve as trustee anymore. Or you can have a resignation that maybe the prior trustee is still alive and has the capacity, but they don’t want to serve as the trustee, or they’re not able to serve to the level that they feel comfortable with. And they’re ready to turn that over to their successor trustee so they could have a written resignation. One of those three documents will clear them off of title as a trustee.

But along with that, we need another legal document that says, hey, I’m the backup. And I would, you know, say in all legal formality that I’m going to serve as the next trustee. And so that comes in the form of a document that we call an Affidavit of Successor Trustee. And the prior document that we were talking about, the Letter of Incapacity or the death certificate or the resignation comes in as an exhibit to that affidavit of successor trustee.

And the affidavit basically has you as the new trustee; the successor trustee, saying, you know, I swear under penalty of perjury, that I’m the acting trustee. The trust is a valid and existing trust, and this person has been either removed or resigned and here’s the document that exhibits that. So the Affidavit of Successor Trustee is that key legal document that moves you into that role of trustee. And we encourage everybody to follow that form of the legal process and do your affidavit and document those things before taking custody or possession of any trust assets.

Certification of Trust

There is one other document that’s called a Certification of Trust that we often do when we have a successor trustee move in. And that third document, the Certification of Trust, is not mandatory; it’s optional. But it’s a handy tool and kind of like an executive summary of the trust that says who the original grantor of the trust was, who the current trustee was or is, and then what the powers of the trustee are and so forth.

So that certification of trust is something you can give to a bank or a title company or whatever, and it gives them the details that they need to move forward.

These are just a few things about the Affidavit of Successor Trustee that will help you understand a little bit better what we’re doing as legal counsel and installing our trustees and getting them in that role so that you can become and move into the office of the current trustee.

In our upcoming videos, we’ve got three more in this series. We’re going to talk more about who I notify, what do I do now, and how I get access to the trust assets? Stay tuned. Watch some more of these videos.

We appreciate you checking us out.

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