Trustee Was Killed

One of my clients was killed. He was also the trustee of the 401k plan. A new trustee was appointed and an amendment was done. The resolution did not address removing the old trustee as I didn't think it needed to be addressed since he was deceased. Shold I have had some language addressing the removal of the deceased person as trustee?

I suppose a given funding institution might require or ask for something removing the deceased from their records, but absent that, it doesn't seem necessary to me. I'll be interested to see what some of the legal experts say. I'm not confident in my off-the-cuff opinion being correct...

Seems like a good idea to have it all in writing.

Having contemporaneous documentation of the change in trustee is a good idea for those uncommon times when a financial institution digs in their heels and refuses to do something until the name of the trustee on the account is changed formally.  This is particularly true when there is only one named trustee on the account.

I have had financial institutions refuse to close an account when assets were moving to another institution simply because the name of a former trustee was on the account and the financial institution insisted on getting signatures from all of the named trustees.  This type of demand disrupted an otherwise well-planned transition of assets.

A new trustee was appointed. I was just curious as to whether the actual documentation had to say that the previous trustee was being removed. ie Due to his demise, Mr. S is being removed as trustee and Mr. W will be appointed as the new trustee. My signed documentation doesn't say that but my boss is questioning as to why it didn't.

The existing trust agreement should specifically state the procedures for replacing a trustee and appointing a new one. The new trustee could be seen as an additional trustee, not a replacement, so that distinction should be clear in some documentation, be it a resolution or amendment. There is usually a notice requirement for the exiting trustee, but since that is not possible given your circumstances then I think additional documentation is warranted. A clearly written resolution together with an amended trust agreement with the successor trustee should be sufficient documentation.

Remember how often BenefitsLink neighbors incant RTFD.

Consider all documents governing the plan and its trusts.

What does each document say about what ends a trusteeship?

What does each document say about how a named fiduciary appoints a successor trustee, or an additional trustee?

Was all that done?

Consider all agreements and other documents with each investment provider. And with each service provider.

What does each document say about an obligation to give a party, and perhaps third persons, notice of a change in a trusteeship?

Was all that done?

If careful readings don’t resolve all questions, consider ERISA (if ERISA governs the plan).

If there is a question unanswered by the documents and the statute’s text, consider the Federal common law of ERISA.

If the Federal common law of ERISA applies or is relevant to help interpret the statute, consider the American Law Institute’s Restatement of Trusts as an expression of common law.

Evaluate carefully whether the recent appointment was of a successor trustee, or of an additional trustee.

Consider whether the successor or additional trustee should request that the deceased trustee's personal representative submit an accounting for whatever the decedent did since his most recent accounting.

Consider whether the successor or additional trustee should request that the deceased trustee’s personal representative deliver all trust records the personal representative possesses or could possess.

Consider whether the successor or additional trustee should request that the deceased trustee’s personal representative confirm in writing that the representation has not done anything to administer the trust.

Even if all of what was done was correct under the plan’s and its trust’s governing documents and applicable law, consider redocumenting the changes in the trusteeships. Why? An investment or service provider’s employee might lack discretion to allow anything beyond what a checklist tells the employee to do.

This is not advice to anyone.

In a Board Resolution I would suggest you have as one of the "WHEREAS Clauses" something like whereas the Trustee named ???? has died the Plan Sponsor has determined that ???? be named to replace ?????.  I am NOT providing legal advice, just a suggestion of what you might look for to address the situation, preferably by a competent ERISA attorney.  I think anything else might be overkill.  

Died?  Cold. Harsh.  

How about:  "departed this life", perished, croaked, expired, flat-lined, "passed away","passed on", "bit the dust", "kicked the bucket", "went belly-up", "gave up the ghost", "bought the farm", "gone to glory", "shuffled off this mortal coil", "moved beneath the grass", "mortis est", "gone to his eternal rest", "met his maker", "pushing up daisies", "augered in", "cashed in his chips", "ate a Twinkie", "living on a farm", "riding the pale horse", "shaking hands with Elvis", "six feet under", "sleeping with the fishes".  

Yes, read the terms of the governing documents and do what they say.  That said, I don't know if I have ever seen a document that would cover the death of the trustee in a qualified plan or trust document.  I have seen such language in private trusts (e.g., testamentary trust), which would if anything provide that if the trustee is unwilling or unable to serve then someone or the court can appoint the successor.  Obviously here you have the right to appoint a successor.  I would argue you do not have to remove the old trustee because the old trustee is dead and the morgue or ambulance is responsible for removing the dead, not you (dark humor... sorry).  I mean what are you going to do send his estate a removal letter ... that would be in poor taste. That is, because this person was an individual (as opposed to say a corporate trustee) there is no one to remove.  That said, I agree with @Below Ground you could do a set of "ratifying/affirming" resos ... just have some language in some document giving the historical references really showing what happened in case someone is every needing to figure it out. 

Thanks Artie M for the constructive comment.  I was just trying to offer a suggestion of what I might use in this situation.  I certainly was not trying to be "cold and harsh".  If someone wants their version to use something like "went belly-up" in lieu of "has died" that is fine by me.  Bottom line is if you are the author, feel free to use whatever verbiage that pleases you.