Can a Trustee Remove a Beneficiary From a Trust?
Can a Trustee Remove a Beneficiary From a Trust?
By Rebecca Lake, CEPF® Tue, April 4, 2023
Creating a trust as part of your estate plan is something you might consider if you'd like to ensure that your assets will be managed according to your wishes after you're gone. When you establish a trust, you'll need to name a trustee to manage assets and one or more beneficiaries who can receive them. Can a trustee remove a beneficiary from a trust? Generally speaking, no, but there are other scenarios when a beneficiary can be removed. For help with your estate plan, consider talking to a financial advisor who has estate planning expertise.
Trustee vs. Beneficiary Rights and Responsibilities
A trust is a legal arrangement in which one person, called a grantor, transfers the management of assets to someone else. That someone else is called a trustee.
It's the trustee's job to manage the assets in the trust according to the terms and conditions set down by the grantor. They do so on behalf of one or more beneficiaries. A trust beneficiary is an individual or entity who benefits from the trust.
So, say you want to set up a trust on behalf of your three children. You could name your brother as the trustee and include specific directions about when your children would be entitled to receive assets from the trust. For instance, you might specify that they can't get their inheritance until they reach a certain age or get married.
The trustee is obligated to follow your directions to the letter because they have a fiduciary duty to do so. Fiduciary duty requires trustees to act in the best interests of beneficiaries at all times.
Technically, a trustee can also be a beneficiary but that's not common. It may not be wise either if you'd like there to be some separation of rights and responsibilities between your trustee and your beneficiaries.
Can a Trustee Remove a Beneficiary From a Trust?
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