If beneficiaries do not wish to have a “trust” to fill a vacancy as trustees, the beneficiaries or other “interested parties” may apply to the court to appoint a person to fill the vacant trustee position. Such a petition would be filed with the local probate court under Section 17200 of the California Estate Code. The application would describe the trust, describe the issue of the trustee`s vacancy, describe the proposed successor trustee, and provide any other information that the court may deem relevant. A hearing would be scheduled, where the judge would approve or reject the application. (c) The order of the order shall include an annual bond commission in accordance with article 15688. Unless the beneficiaries say they do not want it, the trustee must file a declaration of all escrow transactions while acting as trustee. (d) If the vacancy in the position of trustee is not filled, as provided for in paragraphs (b) or (c), at the request of an interested person or a person designated as trustee in the trust deed, the court may, at its discretion, appoint a trustee to fill the vacancy. If the trust provides for more than one trustee, the court may, at its discretion, appoint the initial number or a smaller number of trustees. When selecting a trustee, the court takes into account any designation by beneficiaries who are at least 14 years of age. (b) Where the trust deed provides for a practical method of appointing a trustee or designates the person to fill the vacancy, the vacancy shall be filled as provided for in the trust deed. It is perfectly legal to appoint a beneficiary of the trust (someone who receives the trustee`s property after your death) as the successor trustee. In fact, it`s common. EXAMPLE: Mildred names her only child, Allison, as the sole beneficiary of her living trust and successor trustee of the living trust.
In the event that the trustee is unable or unwilling to continue to act as trustee, often due to disability or death, a trust should appoint a successor trustee and multiple agents to ensure that the trust is still managed by a trusted person. There is no legal limit to the number of alternative successor trustees who can be appointed to a trust, and it is important to have a “deep bank”. Some trusts say that the trustee cannot distribute the assets for a certain number of years or until another person`s death. In these cases, the trustee is responsible for investing the trust`s assets and may make regular distributions to beneficiaries (where permitted or required by the trust) until all assets in the trust are distributed to beneficiaries. Dealing with tax matters: If there is no executor appointed by the trustee`s estate court (e.B. to manage the assets that the trustee did not have in his trust), as mentioned above, the trustee is responsible for assessing whether estate tax returns need to be filed and ensuring that they are properly and timely prepared and filed. and that all inheritance tax due is paid within 9 months of the death of the grantor. In addition, the trustee will likely have an obligation to ensure that the trustee`s tax returns (e.g. B, state and federal tax returns for the calendar year in which the trustee died) are properly filed and prepared and all income taxes due are paid on time. In addition, the trustee must arrange to prepare and file the trust`s tax returns in order to properly report the income generated after the trustee`s death and before the trust`s assets are distributed to beneficiaries. To do this, it is usually necessary to apply for and obtain a new tax number for the trust from the IRS (a kind of “social security number” for the trust). This number should be shared with the financial institutions holding the trust`s assets so that each financial institution ultimately reports interest and dividend income on the trust`s tax number (instead of, for example, the social security number of the trustee or successor trustee).
If the trustee and all beneficiaries agree: The law states that they can modify or terminate the trust if the trustee and all beneficiaries agree. If a beneficiary does not agree to modify or terminate the trust, the other beneficiaries may, with the consent of the trustee, apply to the court to partially modify or terminate the trust until the interests of the beneficiaries who disagree are seriously affected. If the trust`s capital is not economically low: If the court decides that managing the trust costs more than the value of the trust, the beneficiary or trustee can ask the court to terminate or modify the trust or appoint a new trustee. If the capital of the trust is worth $20,000 or less, the trustee may terminate the trust. Modify or terminate the trust if circumstances change: The law states that the court may modify or terminate a trust if circumstances have changed and maintaining the trust would destroy or weaken the trust. .