Being named a successor Trustee does not necessarily obligate you to take action. While it is true that Trustees have a host of duties and responsibilities, those duties don’t arise until a Trustee agrees to act. Being named a successor Trustee in a Trust document does not obligate that person to act. If, however, the successor Trustee either agrees to start acting as Trustee, or if they in fact do act as Trustee, then the duties arise.
As a result, a named, successor Trustee has no legal duty to take over a Trust estate even if the current Trustee is losing capacity to manage the Trust estate. Having said that, it could still be helpful for a successor Trustee to step in and take over management of the Trust. A successor Trustee is allowed to pursue that option if he or she chooses to do so.
Furthermore, the successor Trustee may believe they have a moral duty to take over management of the Trust. For example, if your father creates a Trust, and is the currently acting Trustee, and you are one of three children, but only you are the named successor Trustee, you may feel obligated to protect your father. If your father starts showing signs of dementia or is no longer capable of managing the finances of the Trust, you must act. As a successor Trustee you have the right to act if you choose to do so.
How And When Should The Successor Trustee Take Over?
How do you take over as successor Trustee? First, your father can voluntarily resign by signing a resignation of Trustee. If your father is not competent enough to do that, then you must follow the Trust terms on incapacity.
Most Trusts will have a provision describing the procedures for determining when (and how) the Trustee lacks capacity. For example, the Trust might say that a Trustee is deemed incapacitated if two licensed physicians sign written declarations stating the Trustee can no longer manage his or her own finances. Sometimes only one physician is required. Whatever the Trust terms state, you follow those terms and then the successor Trustee takes over. No court filing is required.
In our experience most Trusts will have an incapacity provision. If, however, your Trust lacks an incapacity provision, then you must file a petition in court and ask the court to appoint the successor Trustee.
In any event, it can be difficult to know when a parent should be removed. In most cases, it is better to act sooner rather than later to ensure the Trust property is protected and managed properly for the parent’s benefit during lifetime.