Trust documents are an important part of estate planning, created to protect assets and avoid probate, in turn providing individuals with protection and peace of mind. Unfortunately, in some cases, conflicts can arise between trustees and beneficiaries. Whether you are a trustee wondering if you can remove a beneficiary from a trust, or a beneficiary wondering if it is possible that you may be removed, we will explore these differing roles to help you gain an understanding of what moves may and may not be allowed.
Understanding the Role of Trust Beneficiary
A beneficiary is an individual who is named in a trust as either the sole person or one of the people determined to receive assets (money and/or property) that are within trust. The method in which these assets are disbursed is dependent upon the terms outlined in the trust.
Some may inherit their full allotment upon the death of the trust creator(s), or they may receive their allotment through ongoing distributions. The trust creator(s) may have even set forth a plan for a subtrust to be created to retain the assets for the beneficiary. This can be especially true if the beneficiary is a minor.
Understanding the Role of Trustee
A trustee is an individual who is named in a trust as the person responsible for managing assets that have been placed within the trust and facilitating instructions outlined in the trust. Usually, trust creators will establish themselves as the trustee for the duration of their lifetime. Upon their death, they will have named someone in the trust as their “successor trustee” (the individual established to take over as trustee). This is often a close friend, family member, or other trusted individual.
This individual has a fiduciary duty for distributing assets in line with the trust creator(s) wishes and instructions outlined in the trust.
Does a Trustee Have the Power to Remove a Beneficiary?
Now that we understand these individual roles the question remains: can a trustee remove a beneficiary from a trust? The answer is yes in some cases. However, this is dependent on the type of trust and terms outlined in the trust. This is not a common practice as most trusts become irrevocable upon the death of the trust creators, meaning that they intended their named beneficiaries to remain in that role without changes.
Here are some cases in which a trustee may remove or change beneficiaries:
The Trustee is the Creator of a Revocable Living Trust
In this case, the trustee is the surviving trust creator. If the established document is a revocable trust, they have the power to add, change or remove beneficiaries as they see fit.
The Trustee is Given Power of Appointment
In this case, the deceased trust creator may have outlined a general or limited power of appointment for their appointed trustee. This allows the ability to change some of the terms of the trust, which can include the ability to change beneficiaries, remove beneficiaries, or change the asset distributions. This power of appointment is most given to a trustee who is a surviving spouse of the deceased.
The Creator of the Trust (Trustor) Did Not Have Capacity
In this case, if it is proven that the trustor did not have capacity when they established/made changes to their trust, legal action may be required. This would give the courts ability to step in and remove a beneficiary if it is shown that the trustor did not have capacity/they used undue influence on the trustor to be named as a beneficiary of their estate.
What Rights Does a Beneficiary Have?
Are Beneficiaries Able to Challenge Trustees?
Yes, as a beneficiary you have a legal right to challenge a trustee who is seeking your removal. It is essential to act swiftly and contact an attorney experienced in trust litigation. They will be able to review your case and advise you on next steps to protecting your trust assets.
Can a Beneficiary Remove Themselves from a Trust?
Yes, a beneficiary can request to be removed from a trust. However, this request must receive approval from any other named beneficiaries.
Should I Work with a Trust Litigation Attorney?
Whether you are a trustee seeking the removal of a beneficiary, or a beneficiary hoping to protect your trust and estate assets, it is essential to seek counsel from an experienced attorney. The information in this article is for general information purposes only. The laws can vary from state to state, and your attorney can provide you with legal advice and next steps specific to your case. Contact The Legacy Lawyers today to schedule a consultation with our law office!