Apr 03

What Is a Successor Trustee and What Do They Do?

If you have been named as a successor trustee on someone’s trust, you may have a few questions. What does that actually mean? When does your role begin? And what exactly are you supposed to do?

These are good questions, and they are worth answering clearly before you need to act — because when the time comes, it often comes quickly.

The Difference Between a Trustee and a Successor Trustee

A trust is a legal arrangement in which one person (the trustee) manages property for the benefit of one or more other people (the beneficiaries), according to instructions laid out in the trust document.

The original trustee is often the person who created the trust — called the grantor or settlor. In a revocable living trust, which is the most common type used in personal estate planning, the grantor typically serves as their own trustee while they are alive and capable. They manage their own assets, in their own trust, for their own benefit during their lifetime.

A successor trustee is the person designated to step in when the original trustee can no longer serve. The trust document spells out exactly who the successor is, in what order multiple successors are called, and what circumstances trigger the transfer of authority.

What Triggers a Successor Trustee’s Authority?

The three most common triggering events are:

Death of the Original Trustee

When the grantor of a revocable trust dies, their successor trustee steps in to wind down the trust and distribute assets to the beneficiaries according to the trust’s terms. This is the trust equivalent of the executor’s role in a will-based estate — managing the transition after death.

Incapacity of the Original Trustee

This is one of the most underappreciated benefits of a trust-based estate plan. If the grantor becomes incapacitated — through dementia, a serious illness, or any other condition that affects their ability to manage their own affairs — the successor trustee can step in immediately, without any court involvement. This is a significant contrast to what happens without a trust, where a court-supervised guardianship of the estate would typically be required.

The trust document usually defines what constitutes incapacity and what evidence is required. Often, a written certification from one or two physicians is sufficient to activate the successor’s authority.

Voluntary Resignation of the Original Trustee

A trustee can also resign voluntarily. The trust document should outline the process for resignation and successor activation. In most well-drafted trusts, the trustee provides written notice of resignation and the successor automatically assumes authority.

What Are a Successor Trustee’s Responsibilities?

Once you are acting as successor trustee, you have fiduciary duties to the trust’s beneficiaries. This is not a casual responsibility. Fiduciary duties are legal obligations that are enforceable in court, and a trustee who fails to meet them can be held personally liable.

Your core responsibilities include:

Gathering and Protecting Trust Assets

Your first job is to identify all assets that are owned by the trust and make sure they are protected. This means locating bank accounts, investment accounts, real estate, and any other property titled in the trust’s name. It means making sure assets are secure, accounts are accessible, and nothing is at risk of being lost or mismanaged during the transition.

Notifying Relevant Parties

Banks, investment institutions, insurance companies, and other parties with whom the trust does business need to be notified of the change in trustee. You will likely need to provide a copy of the trust document and documentation of your authority to act.

Managing Trust Assets Prudently

Texas law holds trustees to what is called the prudent investor rule. You are required to invest and manage trust assets with the care, skill, and caution that a prudent person would apply. You cannot take excessive risks with trust assets, and you cannot make decisions that benefit yourself at the expense of the beneficiaries.

Keeping Beneficiaries Informed

Beneficiaries have the right to be kept informed about the trust’s administration. You are required to keep reasonably complete records, provide accountings when appropriate, and respond to reasonable requests for information. Our post on trustee pitfalls and responsibilities covers the common ways trustees run into trouble with communication in more detail.

Distributing Assets According to the Trust Terms

If you are stepping in after the grantor’s death, you will ultimately be responsible for distributing trust assets to beneficiaries as the trust document instructs. This may happen immediately or over time, depending on how the trust is structured. You must follow the trust’s terms — not your personal opinion about what is fair.

Filing Tax Returns

When a trust becomes irrevocable — which a revocable living trust does upon the grantor’s death — it becomes a separate tax entity. You will likely need to obtain a new tax identification number for the trust, file a final income tax return for the grantor, and file trust income tax returns. Working with a CPA experienced in trust taxation is strongly recommended.

What to Do When You First Step Into the Role

If the time has come for you to act as successor trustee, here are the practical first steps:

• Locate the original trust document and read it carefully — the instructions are in there
• Gather documentation of your authority (typically a copy of the trust and, in an incapacity situation, the required physician certifications)
• Contact an estate planning or trust administration attorney — this is exactly the kind of situation where professional guidance pays for itself quickly
• Identify all trust assets and notify financial institutions of the change in trustee
• Open a trust checking account if one is not already in place
• Contact a CPA about tax obligations
• Notify the beneficiaries that you have assumed the trustee role and provide them with basic information about the trust

Do You Need an Attorney?

In most cases, yes. Even a well-drafted, straightforward trust involves enough moving pieces — legal notifications, tax filings, asset management decisions, potential family dynamics — that professional guidance is genuinely valuable. The risk of getting something wrong is real, and the personal liability that can follow a misstep is real too.

Our post on whether you need an attorney if you are named executor or trustee walks through the specific risks and how legal support helps reduce them.

Frequently Asked Questions

Can I decline to serve as successor trustee?

Yes. Being named as successor trustee in a trust document does not obligate you to serve. You can decline the role, in which case the next named successor would step in. If no successor is available, a court can appoint one. If you are considering declining, it is worth discussing with an attorney before making a final decision.

What is the difference between a successor trustee and an executor?

An executor manages an estate that passes through a will and the probate court. A successor trustee manages assets that are already inside a trust, without court involvement. These can be the same person or different people. In a trust-based estate plan, most assets flow through the successor trustee, while the executor handles any assets that were not in the trust.

Can a successor trustee be removed?

Yes. Texas courts have the authority to remove a trustee who is not fulfilling their duties, is mismanaging trust assets, or has a conflict of interest that is harming the beneficiaries. Beneficiaries can petition the court to request removal. This is also why choosing a trustworthy successor and having a backup named is so important.

Does a successor trustee get paid?

Yes. Texas law allows a trustee to receive reasonable compensation for their services. The trust document may specify the amount or method of compensation, or it may be silent on the issue — in which case the trustee is entitled to reasonable compensation as determined by the circumstances. If you are a family member serving as trustee, you can waive compensation if you choose.