LEGAL GUIDE
Written by attorney Dennis Pearce Kelly | Aug 8, 2012

Disability? How to Smoothly Pass the Reigns to Your Successor Trustee

You have established your Living Trust. You have appointed a very trusted person to be your successor Trustee. This person will take over as Trustee, if you become unable to manage your Trust. But just how does your successor Trustee do that? What is the process by which your successor Trustee can to begin to function as Trustee of your Trust, paying your bills and otherwise managing your assets?

The two traditional ways for this to occur are: (1) Physician Certification. Your successor Trustee must arrange to get letters from two physicians who have examined you, certifying that you are unable to consistently manage your Living Trust. (2) Court Action. Your successor Trustee must go to court and ask a judge to declare you unable to function as Trustee of your Living Trust. Yet, there is a much simpler way to handle this.

The Conditional Resignation of Trustee.

Assuming a high level of trust in the person designated to be your successor Trustee, you, as Trustee of your own Trust, sign a document in which you resign as Trustee of your Trust in favor of the named successor Trustee, BUT YOU STATE CLEARLY THAT YOUR RESIGNATION WILL NOT TAKE EFFECT UNLESS AND UNTIL YOUR SUCCESSOR TRUSTEE SIGNS THE ATTACHED CONSENT TO SERVE. Then, on the same page, or on the next page, provide a "Consent to Serve" by which the successor Trustee would indicate that he or she accepts the job, effective immediately.

IMPORTANT: Be sure to place a written warning next to the signature line provided for the successor Trustee, advising him or her that HE OR SHE IS NOT TO SIGN THE CONSENT TO SERVE, UNLESS YOU HAVE BECOME INCAPACITATED. This document, then, becomes a key by which your successor Trustee can step into the position of Trustee. When the need arises, your successor Trustee need only sign the Consent to Serve, have it notarized, and present this document to the bank, the broker, or whomever to begin to function as Trustee of your Trust. No need for a court order. No need for two letters from doctors.

I have been using this device for about 30 years. It has worked very well. Here is sample wording for the use of a single Trustor, which can also be adapted for the use of a married couple:

******************************

Conditional Rersignation of Trustee

I, John Doe, Trustor of the John Doe Family Trust, dated January 1, 2020, presently serving as the sole Trustee of the said Trust, do hereby resign as Trustee of the said Trust in favor of Mr. Fulano de Tal. This Resignation by me shall not take effect unless and until Mr. Fulano de Tal shall execute the Consent to Serve which accompanies this document.

dated: ___________________ [Signature]

[Form for Notary Public]

Consent to Serve as Trustee

(Do not sign this form, unless John Doe has become unable to function as Trustee)

I, Fulano de Tal, having been designated successor Trustee of the John Doe Family Trust, dated January 1, 2020, do hereby consent to serve as sole Trustee thereof, effective immediately.

dated: ___________________ [Signature]

[Form for Notary Public]

******************************

WARNING: THE USE OF THIS FORM REQUIRES THAT THERE BE A HIGH LEVEL OF TRUST BETWEEN THE TRUSTOR AND AS SUCCESSOR TRUSTEE. OBVIOUSLY THE SUCCESSOR TRUSTEE COULD WRONGFULLY EXECUTE THE CONSENT TO SERVE AND STEAL THE ASSETS FROM THE TRUST. In my experience this Conditional Resignation of Trustee is most often found to be appropriate where a son or daughter has been appointed successor Trustee.

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