Can a Trustee Remove a Beneficiary From a Trust?

Updated August 2, 2023
13 min read
Can a Trustee Remove a Beneficiary From a Trust?

Introduction

Probate lawyers are frequently asked whether a trustee can remove a beneficiary from a trust. The simple and most straightforward answer is no. The only person who can amend the list of beneficiaries is the creator of the trust. However, there are certain situations where this is possible. In this article, we look at when you can remove a beneficiary from a trust and explore how to navigate this process.

What Are the Trustee and the Beneficiary of a Trust?

As we navigate through the complexities of trust structures, we must highlight and explore in detail the roles of a trustee and a beneficiary. One particular complexity that often arises is the question of how, or indeed whether, it's possible to remove a beneficiary from trust. 

Both roles contribute to the effective functioning of a trust, yet they carry unique responsibilities, privileges, and powers, particularly over the trust's properties and assets. Whether a trustee has the power to remove a beneficiary from a trust can depend on many factors. Although there could be scenarios where these roles overlap, it is imperative that we discern the distinction between them. The power to remove a beneficiary from trust can often be a contentious aspect of this relationship. 

To accomplish this, we will delve into the explicit legal definitions of both a trustee and a beneficiary, including examining the circumstances under which they may wish to remove a beneficiary from a trust, aiming to interpret their relevance to the overall operation and intent of a trust.

Introduction to the role of a trustee

At its most basic, a trustee refers to an individual or a group of individuals designated by the grantor, who is often the creator of the trust. The potential for a trustee to remove a beneficiary from a trust is therefore, dependent on the terms established by the grantor. 

This important figure holds the responsibility to manage and maintain the properties and assets held within the trust. The process of potentially having to remove a beneficiary from a trust can influence this management. The grantor may opt to appoint a trustee who ardently oversees the effective operation of the trust, including the possible necessity to remove a beneficiary from trust. 

However, the grantor is not precluded from fulfilling this role personally. In such cases, the grantor may retain the power to remove a beneficiary from trust if this role is not delegated elsewhere. This can occur in situations where the grantor believes that they are the most appropriate match for the management of their created trust.

In order to ensure the trust is perpetually managed in a way that fulfills the grantor's intent, a successor trustee is named within the trust documentation. The eventuality of needing to remove a beneficiary from the trust may fall into the hands of this successor. This successor is entrusted with the responsibility of taking over the trust management in the unfortunate event the original trustee is incapacitated or unable to fulfill their duties for any reason, which may also include the inability to remove a beneficiary from a trust, ensuring that management continues without any disruptive breaks. 

As a preventive measure, it is highly recommended that grantors have a detailed, legally-binding last will and testament template in place. When situations arise where it is necessary to remove a beneficiary from a trust, having such a detailed plan greatly aids the process. This serves as a roadmap that assists in setting up a seamless process for handling their trust affairs under unforeseen circumstances, possibly including the need to remove a beneficiary from the trust.

Actual updates
|
3 pages
PDF
|
6K created templates

Secure yourself with a ready-made last will

Last Will and Testament Preview
Preview
Create & Download

Understanding the role of a beneficiary

Shifting focus to the other pivotal entity within a trust structure, a beneficiary is defined as an individual or an organization that is viewed as the core focus of the trust. There may be scenarios when it is necessary to remove a beneficiary from a trust, and these are the parties that are most directly affected. They are the parties entitled to receive the properties and benefits held within the trust following the demise of the grantor. 

If a grantor or trustee has plans to remove a beneficiary from trust, it is usually these parties who are directly impacted. Most commonly, beneficiaries are close acquaintances, familial relations, or charitable organizations directly or indirectly identified by the grantor. Selection tends to hinge on the personal preferences of the grantor at the time the trust was established, but it's important to remember that circumstances can change, and it may become necessary to remove a beneficiary from the trust.

A key point to consider is that the roles of trustee and beneficiary are not mutually exclusive. In certain circumstances and structures, a trustee can also be named as a beneficiary and vice-versa. This could even result in a trust where a trustee is called upon to remove a beneficiary from a trust, when in reality the intended beneficiary is the trustee themselves. This indicates that the individual can be entrusted with both maintaining the trust and receiving the benefits from it, even while dealing with the legally complex process to remove a beneficiary from trust. 

Therefore, careful consideration and planning should be applied in the critical process of appointing both trustees and beneficiaries due to the responsibilities and potential benefits involved, which may include the steps to remove a beneficiary from trust.

Powers of a Trustee

As the person responsible for managing and administering the trust, a trustee has many powers. This ensures that they can do their job and deal with trust matters effectively, without the ability to remove a beneficiary from a trust. Below is a list of the common statutory powers a trustee will have over the trust, excluding the power to remove a beneficiary:

  • The power to insure the trust property.

  • The power to make reasonable repairs to the trust property.

  • The power to sell trust assets and property.

  • The power to invest to create income and/or capital growth.

  • The power to pay bills and expenses with trust funds.

  • The power to make payments to the named beneficiaries.

In some instances, the trustee will also be given the power of appointment, allowing them to amend the terms of the legal document. However, this power does not extend to the removal of a beneficiary from the trust.

Conclusion

In conclusion, the ability to remove a beneficiary from a trust is often a power that lies predominantly with the grantor. While a grantor can exercise this power freely in the context of a revocable trust, the ability to remove a beneficiary from a trust becomes significantly curtailed once the trust transitions into an irrevocable setup. Despite these conditions, beneficiaries are not completely without recourse. They hold the right to seek the removal of a trustee under certain predefined circumstances, thus emphasizing the necessity for a comprehensive understanding of specific legal provisions and available options in every unique situation.

Navigating the multifaceted arena of trust law requires the pervasive guidance of attorneys boasting a strong specialization in trusts and estate law. These legal experts can dispense invaluable advice on the process of removing a beneficiary from a trust, given the constraints and provisions applicable, or guide beneficiaries in their pursuit of seeking removal of a trustee. 

For a comprehensive suite of legal resources and services, including an extensive catalog of trust-related templates and documents, look no further than Lawrina. Regardless of whether you find yourself in the role of a grantor aiming to establish a trust, or a beneficiary grappling with trust-related complications, immediately seek professional legal advice. 

Article by
Inna Chumachenko
Lawrina

Inna Chumachenko is the Content Lead at Lawrina. She is responsible for managing all the content found on the blog, guides, and other website pages. Inna has a degree in philology and a vast interest in law. In her role at Lawrina, Inna oversees the content team, establishes collaborations with writers, and curates content from various contributors.

If you have any questions or suggestions regarding the content for Lawrina, please feel free to contact Inna directly via email at i.chumachenko@lawrina.org or connect with her on LinkedIn.

Frequently Asked Questions

How do I remove a beneficiary from a trust?

To remove a beneficiary from a trust, the trustee needs to submit a trust amendment form. This allows the trustee of a revocable trust to make changes to the original document while keeping it active. If the trust is jointly owned, both trustees must agree to any amendments made.

Can a trustee change the beneficiaries of a trust?

If the trust in question is a living trust where the trustee is the grantor, they can change the beneficiaries by amending the trust deed. However, the beneficiaries of an irrevocable trust cannot be removed. The role of the successor trustee is to carry out the wishes of the grantor, even if that means handing the property to the named beneficiaries.

Who has more rights, a trustee or the beneficiary?

The dynamics between a trustee and a beneficiary within the context of a trust are intricate and often subject to the specifics of the trust agreement. Generally, in the realm of property management and administration, the trustee does wield more rights than the beneficiary. This is because they are often the ones responsible for managing the trust's assets in the best interest of the beneficiary. However, the scenario to remove a beneficiary from trust is not typically within the trustee's prerogative unless the grantor, who has established the trust, retains control over it.

 

Even though beneficiaries may not have the same level of operational control over a trust as trustees, they do hold certain rights of their own. One such right, provided under certain conditions, allows beneficiaries to petition the court to remove a trustee from trust. This action can be taken when beneficiaries believe the trustee is not acting in their best interest or is violating the terms of the trust.

 

If you wish to discuss the details of your trust, and fully understand your rights as either a trustee or a beneficiary, we highly recommend reaching out to a lawyer to facilitate an in-depth discussion about your particular circumstances.