Setting up a trust to manage your assets on behalf of your loved ones results in a range of benefits. Done right, a trust can ensure that your estate does not go through costly and time-consuming probate, avoid certain taxes and preserve your loved ones’ privacy.
One of the most important designations you need to take seriously when setting up a trust is naming a trustee. Basically, this is the individual or entity that will be responsible for managing the trust and ensuring that your beneficiaries receive their allotments per your wishes as outlined in the trust’s instruments.
Ultimately, even if you choose a trustee in whom you have complete confidence, it is not uncommon for a trustee and a trust’s beneficiaries to get into disagreements. If this happens, can a trustee opt to remove a beneficiary from the trust?
Understanding the powers and roles of a trustee
Generally, a trustee does not have the authority to amend a trust, especially if the trust is irrevocable. This ensures that the settlor’s wishes are implemented and that the beneficiaries inherit what has been set aside for them.
However, there are instances when the trust’s instruments can give the trustee the power to effect certain amendments to the trust. This may include the power to designate and remove a beneficiary. If this provision exists, then the trustee might make such changes in line with the terms and conditions of the trust instrument. This is generally referred to as the power of appointment.
Most people grant the power of appointment to their spouses. For example, if a couple sets up a trust, then the trust instrument might stipulate that upon one spouse’s demise, the surviving spouse will have the power to change the trust as they deem fit. And part of this change might involve adding or removing a beneficiary to the trust.
A trustee’s ability to add or remove a beneficiary from a trust depends on the stipulations of the trust instrument. Meaning, if you are interested in setting up a trust, you’ll get to decide whether the trustee has the power to remove a beneficiary or not.
