When to assign a Sucessor Trustee

When to assign a Sucessor Trustee

Forum topic posted in Forum on 14 July 2011| comments
audience: | last updated: 14 July 2011
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Settlor A (we'll call him Abe) established a CRUT in 2001 with the help of a public radio station. As this CRUT was the first one benefitting the radio station, making the station the Trustee was not considered as an option. Lacking any other ideas re managing the money or making a Trust Company the Trustee, Abe decided to be the Trustee himself, to run the money and also file the annual 5227 with the IRS.  This continued for ten years with adequate results, i.e. the current valuation is 92% of the original valuation.

Recently Abe has become the beneficiary of a trust derived from a family trust. He is not the trustee, but now receives a comfortable income that more than covers his ongoing needs. No longer needing the CRUT distributions, Abe can continue to donate back to the CRUT as in the past, but now possibly at 100% level indefinitely.

Abe has just turned 68, in excellent health, was never married and has no children. He has no debts, owns 2 properties in full, and lives inexpensively. A small Social Security payment more than covers Medicare deductions.

Abe wants to turn over the Trusteeship of the CRUT to a well-respected Trust Co now rather than later. Running a $Mil on a daily basis in addition to his personal investments, plus doing the 5227 is too much work. The chosen Trust Co wants to become the sucessor trustee to the CRUT, explaining that this is their preferred mode of operation. The radio station by now has at least a few (several?) Donation Entities that have been set up over the past decade and are being managed by a local Financial Manager. But not local to Abe, who has been living 2000 miles away for the past 8 years. Hence Abe's desire to use the well-respected wealth management Bank & Trust Co as the new Trustee. Plus Abe still plans to change the Remainderman mix from 100% radio station to 33% college, 33% prep school, 33% radio station. This is clearly allowed by the CRUT.

Abe has decided that it is also time for him to set up a new Will (or living trust) to handle his future personal needs. If the CRUT Trusteeship can be turned over to the Bank before the new Will is created, that will be one less item to have to deal with.

Should Abe continue with this plan or has he failed to consider any major (or minor) issues?

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