When our Living Trust clients get to the part about naming a Successor Trustee, it means they’re nearly finished. They’ll quickly write down the name of their brilliant scientist daughter who lives in Boston whom they rarely see or their dreamy artist son who lives right here in the Bay Area. The reality is that neither of these people is likely to be a good choice.
Successor Trustee can be a demanding, time-consuming job
A successor Trustee is the person who will assume control of your Living Trust after your death or when you’re unable to continue with your responsibilities. It’s up to the Successor Trustee to distribute the estate according to the terms of the Trust. This is a big responsibility, and depending on the complexity and size of the estate, it can be demanding and time consuming. There are always financial reports to review, so the person you appoint should be adept at dealing with numbers. He/she must be able to interact with not only all of the family members, but bankers, CPAs and insurance agents. The Successor Trustee should be someone who has the time and patience to deal with the often-unexpected details that will surface as your estate is closed.
A classic example of naming a really bad Successor Trustee: Doris Duke and her butler
Let’s take a look a Doris Duke. Born on November 22, 1912, Doris Duke was the only child of James Buchanan Duke, a founder of the American Tobacco Company and Duke Energy Company and a benefactor of Duke University. Duke was dubbed “the richest girl in the world” by the media. When she died in her Beverly Hills home at the age of 80 in 1993, with a net worth of nearly $1 billion, she left the majority of her estate to the Doris Duke Charitable Foundation.
Semiliterate butler responsible for managing a $1B estate
Duke apparently led a lonely life and had disinherited her only child, a daughter, several years before her death, yet she had befriended her butler, Bernard Lafferty. When she died, she left the Irish-born Lafferty $5 million and made him a co-executor of her estate, which included administering her Foundation. Lafferty had little formal education and was semiliterate, but quickly developed an appetite for nice things and spent lavishly. He also abused alcohol and drugs.
Not unexpectedly, the daughter contested the will, and after more than two years of legal battles, they reached a $65 million settlement with Lafferty and the estate. Importantly, a seven-member board was appointed to oversee the Foundation, which supports the arts, environmental efforts, education and other causes.
There is some irony here. Duke had left her semiliterate butler to make decisions about how nearly $1B of her money was to be spent on charitable causes. There are now seven experienced people making these decisions for the Foundation. While most of us don’t have huge estates that we’ll be leaving to our heirs, there is nonetheless a fair amount of complexity. Think about this as you name your Successor Trustee.