When someone creates a trust, they designate a person to oversee and manage the trust. This person is called a trustee. The grantor is the person who establishes the trust. With a revocable trust, the grantor has the ability to make changes to the beneficiaries as well as the trustee while he is alive. Once the grantor dies, the trust is irrevocable and, in general, a trustee is not allowed to make changes. It is helpful to understand the role and responsibilities of the trustee.
What is a Trustee?
A trust is a legal vehicle that you can utilize to transfer assets to beneficiaries in a manner that meets your requirements. A trustee is the person designated to make decisions and oversee the deceased person’s trust. The trustee must make decisions that are in the best interest of the deceased. He or she will handle the property and other assets of the grantor. Importantly, the trustee has a fiduciary responsibility to act in accordance with the wishes of the grantor. The trustee has the right to hold the property on behalf of the beneficiaries. A trustee must properly manage the assets of the grantor.
A person who makes a trust is in charge of naming beneficiaries. The beneficiaries and their inheritances are entirely under the control of the grantor, or maker of the trust. A beneficiary is a person that you designate to receive property or assets after your death. The trust holds the assets so they can be properly distributed to the named beneficiaries. Sometimes, a person does not agree with the listed beneficiaries or the distribution of assets from a person’s trust following their death. However, generally, the named beneficiaries are entitled to the assets based on the wishes of the grantor. Only the grantor can make changes to the beneficiaries, which must be done prior to death, and only for revocable trusts.
When Can the Trustee Make Changes to Beneficiaries?
While generally, the trustee cannot make changes to the trust, there are circumstances where it may be possible. The trust must specifically provide the trustee with power of appointment. The trust agreement must specifically grant the trustee the right to add or remove beneficiaries. Most standard trust agreements do not allow for this power. Therefore, if you wish to allow the trustee to amend the beneficiaries, you must include the statement within the agreement. If a trustee makes changes without having been provided specific power to do so, they could be removed as trustee and could face legal ramifications.
In the case of a marital trust, the living spouse could also be allowed to make decisions regarding the distribution and handling of assets and property. The spouse is the beneficiary and has the right to make decisions for how assets will be given to children and other beneficiaries. In this instance, the spouse is not the trustee and a different person is designated the trustee to oversee the trust.
Whether you are creating a trust or are the beneficiary, you may have questions and concerns about trusts and the process of designation of beneficiaries. To learn more about trusts, contact our legal team at Moen Sheehan Meyer, Ltd. by phone at (608) 784-8310 or by email.