Trusts are valuable estate planning tools that have many benefits. When done correctly, they can save loved ones from paying thousands of dollars in estate and gift taxes. Also, most trusts allow for immediate, private transfer of assets.
But what happens if a beneficiary should no longer receive assets from a trust; can a trustee remove them from it?
What is a Trustee?
A trustee is someone trusted to carry out the wishes of the trust’s creator. They are responsible for distributing assets from the trust to the beneficiaries. If the grantor (trust creator) is still alive, the trustee should act in their best interest and always perform activities by following the language of the trust. However, this isn’t always the case.
There are several instances where trustees don’t carry out the grantor's wishes and act selfishly.
Can A Trustee Remove A Beneficiary From A Trust?
The trust must be structured to allow for changes, and the trust creator must give the trustee the power of appointment.
How Can a Trustee Remove Beneficiaries From a Trust?
As a trustee, you can't just remove a beneficiary without going through the proper legal avenues first. You must have been given the power of appointment outlined in the trust itself.
Here's the whole process trustees must go through to remove a beneficiary from a trust:
Check the Language of the Trust
As mentioned above, for a trustee to remove a beneficiary from a trust, the trust must include language that gives someone the power of appointment.
We recommend hiring an estate planning attorney to ensure your trust is worded correctly and nothing is overlooked.
Submit a Trust Amendment to the Court
The trustee must submit a trust amendment form to a court to remove a beneficiary from a trust. If approved, it is legally binding, and the beneficiary will no longer receive assets from the trust.
Why Would a Trustee Remove a Beneficiary From a Trust?
A trustee may want to remove a beneficiary from a trust for many reasons. The most common cause is usually the death of the beneficiary. Sometimes, a beneficiary is removed if they are found to have wrongly coerced the grantor into including them in the trust.
Unfortunately, a trustee may remove perfectly healthy and deserving beneficiaries with power of appointment. This usually happens when a surviving spouse remarries, and the stepparent views a beneficiary (often a child) unfavorably.
Is it Hard for a Trustee to Remove a Beneficiary From a Trust?
If a trustee has been granted power of appointment, it is not hard for them to remove (or add) a beneficiary.
For a trustee to remove a beneficiary from a trust, they must submit a trust amendment form to the appropriate court. The request should be readily granted if they have the power of appointment.
Can a Trustee Add Beneficiaries to a Trust?
A trustee could add beneficiaries to a trust if given power of appointment.
Again, this is seen a lot when a surviving spouse remarries. Particularly when the new spouse has children or the couple has children together. It’s also not uncommon for trustees to add a charity or organization as a beneficiary.
Do You Need Help With a Trust?
Our experienced attorneys at atCAUSE Law our experienced attorneys will steer you in the right direction. They will ensure your trust is structured perfectly for your specific wants and needs.