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What families need to know when a trustor dies

On Behalf of | Jan 9, 2024 | Estate Administration

A trustor or grantor might create a trust for a broad assortment of different reasons. Sometimes, they want to quickly qualify for Medicaid if they need benefits later in life. Other times, they have family members who might struggle with a large inheritance.

There are numerous different types of trusts that people can create. They can use many different types of property to fund the trust and impose a near-infinite combination of restrictions on asset distribution. When the grantor or trustor dies, families are often unsure of what to expect during trust administration.

What typically happens with Pennsylvania trusts when the person who created the trust dies?

A successor trustee takes over

Frequently, people establish trusts long before they die and serve as the first trustee. They also name someone as their successor trustee to take over their responsibilities when they die or become incapacitated.

A successor trustee might be an individual or even multiple people chosen specifically by the testator. Other times, the successor trustee might be a professional fiduciary. That party has a duty to the trust and its beneficiaries. They should follow the instructions provided by the trustor to manage and distribute trust resources.

The assets used to fund a trust typically bypass the probate process, although there are exceptions to this rule. Sometimes, assets must pass through probate before they fund a trust, as would be the case if someone drafted a pour-over will. Ideally, the trustor left clear instructions about the distribution of assets and what should happen to any remaining resources when their selected beneficiaries die. Trust administration should largely follow a Pennsylvania trustor’s instructions.

Families can take legal action if necessary

Sometimes people create trusts specifically because they do not want their families fighting over their resources when they die. Trusts are generally more difficult to challenge in probate court, but it is still possible to do so in some cases.

More frequently, family members need to take action against a trustee who violates trust instructions, breaches their fiduciary duty or fails to act in a timely manner. Removing and replacing a trustee can sometimes help preserve the assets in a trust. If a trustee embezzled or diminished the value of the trust through incompetent management, beneficiaries may sometimes have reason to take legal action against that trustee to recoup those losses.

Oftentimes, trust administration is an ongoing process that may last for years, possibly well after the final resolution of probate proceedings for someone’s estate. Learning about what to expect during trust administration can help families uphold someone’s legacy and protect the resources the grantor wanted them to inherit.