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Can a Trustee Withhold Money from a Beneficiary?

The death of a loved one is undoubtedly a stressful time in your life. After a relative passes away, the person’s trust will be reviewed and dispersed. A trustee is the person assigned to oversee the trust. Many people wonder whether a trustee can use his or her power to withhold money from a legal beneficiary. It is helpful to understand the role of a trustee and his legal responsibilities and obligations.

What is a Trustee?

A trustee is a person who is designated to hold and distribute assets on behalf of a third party. The trustee is tasked with administering the assets of the deceased and must perform tasks that are in the best interest of the trust beneficiaries. The trustee is the administrator of the trust in the same way that the executor oversees a will. A trustee has a fiduciary obligation to properly oversee the assets in the trust and make decisions based on the specific details contained in the trust. There may be one or many beneficiaries that are designated in the trust.

The Power of a Trustee

Generally, the power of a trustee comes directly from the terms of the trust. A trust is a legal document that may specify the details of the distribution of the assets of a trust. For instance, the trust may state that the grandchildren will receive a certain amount of money each year rather than providing the funds immediately in a lump sum. There may also be specific circumstances under which the money can be withheld. Some examples of circumstances or qualifications that could be included in a trust distribution might be that the beneficiary will only get the money if he or she is enrolled in school, or if they are employed. The grantor may include any qualifications that they deem necessary.

Can a Trustee Withhold Money from a Beneficiary?

Generally speaking, a trustee cannot withhold money from a beneficiary unless they are acting in accordance with the trust. If the trust does not indicate any conditions for dispersing funds, the trustee cannot make them up or follow their own desires. The role of the trustee is to oversee the trust, regardless of their own personal ideas. For this reason, it is best to include as much detail in a trust as possible. That way, the trustee and the beneficiaries will not have any question as to the intent and will not have disputes over the distribution of funds.

What if a Trustee Will Not Distribute Funds to a Beneficiary?

Circumstances can occur in which a trustee fails to act according to the trust. In these situations, a beneficiary has the right to seek legal help and legally contest the proceedings. An experienced attorney will assist with these matters because trusts can be extremely complex. If a trustee is acting in a manner that is not in the best interest of the trust, you may be able to take legal action to enforce the terms of the trust. To learn more about trustee obligations and to seek legal help, contact our legal team at Moen Sheehan Meyer, Ltd. by phone at (608) 784-8310 or online.


Published October 1, 2021
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