What do trustors do?
Also known as grantors or settlors, trustors create the living trust, appoint trustees, successor trustees, beneficiaries, etc., and set distribution instructions. The trustors are typically the active beneficiaries of the living trust. Once the trust is in force, there is little for the trustors to do aside from making amendments or terminating the trust.
Trustors are the only ones who can change language in the living trust by use of an amendment. If both co-trustors are living both co-trustors must sign any amendments. Whether a surviving co-trustor can amend all or only part of the living trust depends on the language when the trust was created.
Upon the surviving trustor's passing...
When the last trustor passes, the trust becomes irrevocable (no further changes to the language can be made) and the distribution clauses in the living trust are triggered. At this point, the trustees or successor trustees follow the trust's instructions for distribution of the estate.Trustee(s)
Trustees are the day-to-day managers of all assets in the trust. If the initial trustees are unable to perform due to incapacitation, resignation or death, successor trustees take their place.
While the initial trustees are living, successor trustees act similar to a financial power of attorney agent. Upon the initial trustee's passing, the successor trustees acts similar to an executor.
All trustees have a fiduciary responsibility to manage assets in the best interests of the beneficiaries (initially the trustors). If an active beneficiary believes a trustee has acted reckless or negligent, the beneficiary may take the trustee to court.
Most people, when setting up a living trust, name themselves as both the trustor(s) and trustee(s). When people do so, they maintain control of both the language/appointees of the trust and their assets (bank accounts, properties, vehicles, etc.) just as before they created a living trust. They also cannot sue themselves for mismanaging their own assets!
Typical daily activities of trustees include:
- Putting money in a bank
- Withdrawing money from a bank
- Purchasing groceries for the Trustor(s)
- Buying / selling real estate, cars, etc.
- Borrowing / lending money
- Purchasing insurance
- Any financial activity you engage in regularly
A large portion of a living trust is devoted to the powers and limitations of the trustees.
Couples often appoint themselves as co-trustees. Most trusts are written so if one of trustee is unable to serve, the other trustee continues to act as sole trustee.
A trustee may resign at any time. Only a physician can declare a trustee is incapacitated.