Page 75 - Successor Trustee Handbook

Obviously, the outgoing Trustee will need to transfer all documents and files of the Trust
to the new Trustee; it is advisable to obtain a written receipt from the incoming Successor
Trustee. In some cases, if the Trust document does not already provide that each Trustee
will only be liable for certain acts or omissions that occurred while he or she was serving as
Trustee, it may be advisable to have this receipt accompanied by a “cross-indemnification”
document prepared by an attorney.

Once the new Trustee takes over, it may also be necessary to obtain a new tax
identification number for the Trust (See the Chapter, “Income Taxes”) and to transfer asset
titles into the name of the new Trustee (See the Chapter, “Maintaining Title to Assets,
Transacting Business and Paying Expenses”).

What happens if the outgoing Trustee leaves because of resignation or disability and
later wishes to again act as Trustee or is no longer incapacitated? First, the Trust
document must be reviewed to see what it provides regarding this matter. If the resigning
Trustee was not required by the Trust document to “irrevocably” resign, or the resignation
document did not include this language, it may be possible for that prior Trustee to resume
the Trusteeship. If the prior Trustee was a Trustor, there may be a “come-back-in” provision
stating that, once the Trustor obtains doctor letters stating he or she again has the
capacity to act as Trustee, he or she can step back in immediately (removing the
Successor Trustee by the same doctor letter process described previously). The Trust
document may also provide for a third-party, such as a “panel” or a “Trust Protector”, to
declare that the Trustor is once again able to act and reinstate him or her as the Trustee,
removing the Successor. If the Trustor can otherwise prove his or her capacity, it may also
be possible for the Trustor to amend the Trust, again placing himself or herself as acting
Trustee. In the event that you are the acting Successor Trustee and the Trustor now is of
the opinion that he or she is capable of handling his or her own affairs, but you and/or the
Trustor’s doctors believe that the Trustor lacks the capacity to do so, it may be necessary
for either you or the Trustor or a beneficiary of the Trust to file a petition in the Probate
Court to have a judge determine the issue of the Trustor’s capacity to again act as
Trustee. Whenever there are substantial concerns about the current Trustee continuing to
act or the previous Trustee trying to again act, the Probate Court judge’s order is the
ultimate solution.

Note that a Successor Trustee named in the Trust document is not required to take on the
position of the Trustee, and if he or she does not wish to do so may simply decline to act.
This should be done in a notarized writing and delivered to the next named Successor
Trustee, so he or she may then proceed with the steps outlined above (the same applies to
a Trustee resignation after a Trustee has already begun to act). The decision to decline to
act (or resign) should be considered fully, as the declining (or resigning) person may not be
able to later step back in and serve as Trustee should he or she change his or her mind or
circumstances change.

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