What is a successor trustee? How about a Solo 401(k) beneficiary? How do I name one to my Solo 401(k)?

Created July 20, 2021 16:50

A successor trustee takes control of the trust in your Solo 401(k) and is in charge of distributing it to your beneficiaries.

Where do I name a successor trustee?

You will name a successor trustee when you sign up for an account.

If you are using a Self-Directed Solo 401(k) account, your assets will be held in a trust. The successor trustee will take over assets in the trust in the event of your death, and he or she is responsible to ensure that your property is distributed to your beneficiaries according to the terms of the trust.

The successor trustee and the beneficiary for your Solo 401(k) can be the same person, but keep in mind they are separate in the legal definition.

Can I name a beneficiary in my Solo 401(k)?

You can request a beneficiary appointment form by contacting Support. Once you name beneficiaries, keep this document with your will and estate plans or your successor trustee. In the event of your death, your successor trustee would help execute it.

Why should you name a beneficiary or successor trustee?

Keep your estate in order and hassle-free for your heirs. It's a small procedure, but one often people push off and cause significant problems later.
Tax benefits. Naming a beneficiary makes the transfer of assets smoother, and saves them the trouble of going through the estate.
Financial impact. Leave an impact after you are gone.

Who should be a successor trustee?

After you die, your successor trustee is the executor of your estate. They pay your final bills, sell assets if needed, work on your final tax return, and most important, distribute your assets according to the instructions detailed in your trust.

Keep in mind that if you are delaying when your assets can be distributed, your successor trustee will have to pay attention to your trust for a longer period of time or need to seek special assistance with the assets inside the trust. It would be wise to leave them instructions and resources as to who and which organizations they can talk to.

Who should be a beneficiary?

Your spouse
Your children
Your parents
A trusted immediate or extended family member
A domestic partner if you are not married
A trusted friend who is aware of your intentions, financial situation, and financial plan
A trust