A trust is a legal document, so there are rules around how and when it can be altered. Trustees are given authority over managing and administrating assets outlines in the trust. But, there are legal and fiduciary responsibilities to which a trustee must adhere.
Whether you’re a grantor, a trustee, or a beneficiary, you’ll need to know what a trustee can and cannot do. Here we’ve outlined the powers and limitations of trustees.
Powers of a Trustee
A trustee is the individual or group of people responsible for overseeing the will of the trust and managing the trust’s assets. Trustees are legally bound to adhere to the terms of the trust. The powers of a trustee depend on the type of trustee.
A grantor is the person who creates the trust. The grantor usually serves as the trust’s initial trustee, administering and handling the trust’s assets. As long as the grantor is alive, the document is a living trust. Living trusts are also known as revocable trusts. A grantor has full authority to change a revocable trust at any time.
Once the grantor dies, the trust becomes an irrevocable trust and the successor trustee becomes in charge of the assets. A successor trustee has the authority to oversee the trust’s assets. However, they do not inherit the powers of a grantor. This means that an irrevocable trust cannot be changed.
Can a Successor Trustee Change a Trust?
A successor trustee cannot change a trust. After all of the original creators of the trust have died, no one has the authority to make amendments to the trust. However, the successor trustee maintains whatever authorities are outlined to them in the trust.
Usually, successor trustees are responsible for maintaining assets and distributing them to beneficiaries. Beneficiaries are the individuals for whom the trust is set; they inherit the assets of the trust. A trust can have one or more beneficiaries.
Depending on the document, successor trustees might have decision-making powers regarding when assets can be distributed. There may be some additional provisions for receiving funds written into the document.
Regardless of what decision-making authority is granted to the successor trustee, they do not have the power to change the trust. Successor trustees cannot alter any part of the legal document or unduly remove any beneficiaries from receiving assets.
What a Successor Trustee Can and Can Not Do
Successor trustees do have a significant amount of authority over the trust administration. What a trustee can and cannot do depends on what powers the trust gives them. For the most part, successor trustees can do the following.
- Make management decisions about trust assets
- Insure trust properties
- Make investments
- Sell trust assets
- Distribute assets to beneficiaries
- Pay trust expenses
- Hire attorneys and accountants
Usually, successor trustees do not have the authority to complete the following actions.
- Distribute trust assets to themselves
- Add or remove beneficiaries of the trust
- Change any part of the trust
- Choose not to comply with an action specifically outlined by the trust
- Change the trust distribution schedule
Who Has the Power to Make Changes to a Trust?
There may have been more than one grantor to establish the trust. If this is the case, each grantor maintains the power to change a trust even after one grantor has died. So long as they remain alive and mentally competent, the grantors can make changes to the trust at will.
After all grantors have died, the trust becomes irrevocable. No one has the authority to make changes to the document. The trust will have chosen a successor trustee after the grantors have died. This person will become responsible for managing and carrying out the trust.
They might have the power to make interpretations of the trust if the document is unclear. However, unclear instructions can also be interpreted by the probate court.
If you think that a trustee is mishandling assets or not adhering to the trust, you may have legal grounds to sue the trustee. A beneficiary also has the option to try to remove a trustee from the trust.
How To Remove A Trustee From A Trust
If a trustee has engaged in misconduct, they can be removed from the trust. Serving as a trustee is a legally binding responsibility. Any misconduct or mishandling of assets can result in legal action.
Removing a trustee from a trust requires petitioning the court, so consider hiring an experienced attorney.
If you think that a trustee is in breach of their fiduciary duty, contact an attorney right away. You could have legal grounds to remove the trustee from the trust.
For personalized advice about your trust, schedule an appointment with The Legacy Lawyers by calling 800-840-1998.