Success with Your Successor Trustee

Success with Your Successor Trustee

Article posted in Values-Based on 19 August 2014| 2 comments
audience: National Publication, Daniel P Felix - The Professional Trustee | last updated: 19 August 2014


Dan Felix, our expert on trustees, takes a deeper look at the trustee's successor and the issues with transition.

There’s a lot that you can do to help make sure the next trustee will be successful – and that the family will experience a smooth transition.

It’s about addressing a few potential issues while there’s still an opportunity to do something about it.   Things like:

  • building the foundations for a trusted relationship;
  • managing expectations;
  • acknowledging the different goals of the various family members;
  • clear and accepted decision-making;
  • robust communications.

The successor should get started long before the funeral – otherwise good intentions may get buried as well.

The position of successor trustee can be of critical importance to your family.

That’s because providing concise proactive service in advance can make the difference between a seamless transition and the unfortunately common scenario where the surviving family suffers extra pain and expense. This suffering can even escalate up to the high drama of lawsuits and the destruction of family relationships as well as damage to individual productivity and self-esteem.

Specifically, the suffering is caused by not addressing your key family issues before the successor steps in as active trustee. You may not want your family to meet your successor for the first time at the hospital.

By not addressing your family issues in advance, your family – and your successor trustee – may well face some serious problems with dramatic implications, such as:

  • PROBLEM: The successor has been deprived of developing a trust relationship with the beneficiary; IMPLICATION: the successor can be handicapped in efforts to advance your program, create unity, and mediate disputes;
  • PROBLEM: A failure to manage each beneficiary’s expectations of the trust’s provisions; IMPLICATION: Bad feelings and disputes can surface;
  • PROBLEM: No understanding is established on how to deal appropriately with differences between the beneficiaries; IMPLICATION: adversarial relationships can develop and degenerate, out of control;
  • PROBLEM: No decision-making mechanism is agreed to by the family around health care or end of life; IMPLICATION: un-channeled high emotions can get in the way of family serenity and in carrying out your wishes;
  • PROBLEM: No replacement governance for family businesses is agreed to; IMPLICATION: Disputes can undermine business continuity and profits;
  • PROBLEM: A failure to anticipate the post-transition dynamic of a blended family; IMPLICATION: the family can split and fall into dispute.

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Re: Success with Your Successor Trustee

I recently appointed an institution to be my successor as Trustee of a family trust that holds only exchange traded securities. It took six months to reach an agreement as to future investment policy - and that was without any internal family disputes.

The institution lives on boilerplate that's untouchable, NO changes, so one MUST reach understandings with the people who will be doing the investing by talking and talking and only then very carefully proceeding with their program in tiny steps so the family's priorities are clearly understood by the trust's new administrators.

Such agreement could not have been achieved by an ill or failing trustee. It's a negotiation and those take time, last minute panic will never produce an optimal result.

Our goals were clear and simple but considerable time and effort by all was needed to achieve what I believe will be a good investment policy.

Re: Success with Your Successor Trustee

That’s a good success story, Thomas. Thanks for sharing.

And it underlines some key points:

  • The importance of a shared vision over an Investment Policy,
  • Taking the long view,
  • The virtues of Patience and Persistence, and
  • Knowing whom you are dealing with.

Hope you can keep the internal family disputes away as well!

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