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Saturday, March 29, 2014

Saturday—News from The Successor Trustee: Job Description

Choosing a successor and being a successor

The Trust and The Successor Trustee
I've written previously about the nature of a living trust and the qualities of a good successor trustee.  Because I am both a successor trustee and the architect of my own family trust, I've had to identify certain characteristics that are required in order to administer a trust.

Loyalty & Responsibility

A strong sense of loyalty and an unshakable sense of fiduciary responsibility is at the core of what it takes to administer a trust.

Moral Code

A trust is a contract essentially based on a personal understanding between the grantor and the successor.  The grantor puts his/her faith in the belief that the successor will not only carry out the legal terms of the trust, but will also honor the intentions of the grantor.  Honesty, a sense of fairness, and an uncompromising code of personal integrity guide the successor's decisions.

Personal Fortitude

Add fearlessness, perseverance, common sense, personal drive, an obsessive personality, and what one of the kid dancers at my studio said about me the other night—an air of authority.  I don't think that anyone who knows me would argue with that one.


The ability to work alone.  Much of the work that I've done in order to move through the business of my dad's trust has required lots of time by myself sorting, organizing, cleaning, filing, shopping, writing, hunting, researching, thinking, and crying.  Oh wait, did I say crying?  I meant guessing.  Okay, guessing and crying go together sometimes, so let's just say guessing accompanied by occasional crying.

Healthy Mind & Body

Did I mention insomnia, burnout, and free-floating anxiety?  I guess, those aren't really personal qualities.  They are just part of the job description.  Time management and knowing how to balance work and life outside of the trust are crucial aspects of administering a trust.  It is important to know when to take a break.  I push myself pretty hard, often past my personal limit.  But, I also know that I need uninterrupted sleep, time at night to relax, down time, and regular meals in order to sustain the everyday work.


The ability to bounce back with a fresh perspective and renewed determination.

Running A Marathon

What is so hard about inheritance that makes administering a trust such an ordeal?

I am four months into a process that I was told at the beginning would take six to nine months, maybe longer according to two people I know who are still trying to close a family trust.  Two years is not unusual, particularly when the money is spread all over Kingdom Come.

Where is Kingdom Come, you ask?  According to the Bible, it's "the next world" or "the end of time."  When you're hunting down over 50 years of financial accounts, be prepared for an arduous journey.  It turns out that Kingdom Come is wherever there are accounts in which to park investments.  And, to get there, you'll need a winged horse and a holy grail of single-malt scotch (well, it helps anyway).

Why This Is Important

Up until I became a successor trustee, I did not grasp the scope of the work.  My eyes would start to glaze over after the first five minutes of listening to Suze Orman talk about setting up a trust.  I'm listening, now.  Like getting a divorce, owning a house, or having a baby, it is a hard subject to relate to unless you've gone through it.

I can honestly say that there has not been a single day since my dad died that I haven't thought about this trust.  I am on a critical path where one thing leads to another, and every decision changes the outcome of the following day's events and activities.  It is the Butterfly Effect, and the goal each day is to control the chaos and move all of the unrelated pieces toward resolution.  In Newtonian mechanics, this is known as a, "dynamical system," in which the future outcomes are known for only a short period of time and are dependent upon the changes that take place each moment.

From Wikipedia - Dynamical System

"To determine the state for all future times requires iterating the relation many times—each advancing time a small step. The iteration procedure is referred to as solving the system or integrating the system. Once the system can be solved, given an initial point it is possible to determine all its future positions, a collection of points known as a trajectory or orbit."  

Yep, it's like that.  

Even the most well planned trust is complicated because a trust is a dynamical system that is influenced by outside sources that are unknown until you get to a certain point in the evolution of events.  So, why should anyone go through the trouble of putting together a trust?  For one reason.  

Your life does not end when you die.  And, I'm not talking about floating up to Heaven and sitting on a fluffy cloud with a harp and an unlimited supply of nacho cheese-flavored Doritos.    

Reality dictates that we all leave a footprint, and in one way or another, our heirs are bound to it.  It's hard to ignore a house, automobiles, furniture, beautiful gardens, pets, clothing, mementos, unpaid bills, taxes, a garage full of tools, and decades of active living.  

A trust represents the orderly conclusion of all business.  This happens with or without a legal trust, but a trust provides clear instructions on how to proceed, and it simplifies everything.  The focus is not so much on fair dispensation or telling people how much you like them.  Those are things that should be done before you die.  If you want to provide for relatives &/or friends with gifts, do it before you kick off.  Take care of this distribution yourself.  It's more meaningful when the grantor is still alive, and it reduces stress later on for the successor trustee.  

Who Gets What
If the gifts are substantial enough to keep intact before you die, they can be stipulated in the pour-over will (a catch-all will that goes with the trust) or in the terms of the trust itself.  Cash gifts for the grandkids, for instance.  Or suppose, you want to leave a car to somebody.  Some people donate money to a college or a favorite non-profit organization.   

I have to say, though, that I am extremely grateful that my dad did not stipulate a list of gifts because it puts the successor in the role of gift giver with potentially volatile consequences.  As administrator of the trust, the successor is in that role anyway, but a general, all-encompassing trust takes the pressure off of the successor to find and deliver a list of items.  My dad simply incorporated all of his personal possessions into the trust, and it was then up to the beneficiaries to decide on who gets what.  

Avoiding Conflict
One sure-fire way to prevent conflict between the survivors is to include a standard "no contest clause," which basically says that anyone who contests or attacks the will/trust forfeits their share and is no longer a beneficiary as if they had predeceased the original trustee.  It may not be valid in all states, but it makes an important statement to the heirs.       

Providing Structure
A trust is about providing a foundational structure so that the business end of a person's life can be closed in an orderly fashion.    

Would the absence of a family trust have changed the outcome of my dad's affairs?  Holy cow, YES.  It avoided legal nightmares with step-siblings, for one.  And, it provided a reasonable timeline for dealing with decades of complex financial issues.  His preparation beforehand, along with the organization of his files, provided a foundation that we would not have had otherwise.  That made my job as successor trustee a lot easier.

Next topic...The Anatomy of a Trust