Senior Connection Expo
October 2, 2018
Appointment Of Successor Trustee
- Review the trust document to determine who is appointed as successor trustee(s) upon the death or incapacity of the settlor (i.e. the person who created the trust). If the settlor is alive, but incapacitated, review the trust terms to ensure you have acceptable evidence of incapacity.
- The trustee’s acceptance of the appointment does not have to be formal to be effective. If the trust document does not provide a method or the method provided in the terms is not expressly made exclusive, a trustee accepts the appointment by accepting delivery of the trust property, exercising powers or performing duties as trustee or otherwise indicating acceptance of the trusteeship. A.R.S. § 14-10701.
- If the trust requires the successor trustee to obtain a fiduciary bond, make sure the successor trustee is bondable before proceeding.
- Prepare affidavit of appointment of successor trustee(s). If there is real property titled to the trust, the affidavit will need to be recorded. Some attorneys record the certificate of trust existence instead of an affidavit, but the certificate does not show the events leading to the appointment of the successor as the affidavit does. The affidavit should also be provided to financial institutions when retitling assets to the new trustee’s name.
- If the trust became irrevocable upon the death or incapacity of the settlor, the successor trustee will need to obtain an employer identification number (EIN) for the trust using IRS Form SS-4. The successor trustee will also need to complete IRS Form 56 and Arizona Department of Revenue Form 210 to notify the taxing authorities of the appointment. The successor trustee will need to file annual tax returns for the trust as well.