You went through the trouble of creating a trust, now you’re wondering if the successor trustee can change your trust by altering the terms, distribution schedule or removing beneficiaries. So, can a successor trustee change a trust and undo all of your hard work? Read on to find out.
What is a trust?
A trust is a legal instrument that shields your assets from probate and allows you more control over how your estate is managed after you pass away. Trusts generally involve the grantor or creator of the trust, the trustee and the beneficiaries. Like a last will and testament, a trust allows someone to formally declare their last wishes regarding their legacy. Trust assets can avoid probate, unlike assets controlled by the last will and testament.
Additionally, while a will only comes into effect after you die, trusts can be used both during your life as well as after. Typically, the person who creates the trust is the initial trustee. In the trust documents, they designate an individual or multiple individuals to take over the management of the trust after they die — known as successor trustees.
Why designate a successor trustee?
Many people create a revocable living trust during their lifetime. Since they won’t be around to carry out their final wishes themselves, they designate one or more successor trustees to oversee the distribution to the trust beneficiaries. Naming successor trustees is important to ensure your assets get into the right hands. If you don’t appoint a successor trustee before you die, you leave the fate of your legacy to the courts.
What can and can’t a successor trustee do?
The successor trustee has a significant amount of control over the trust, but they are typically prohibited from making any changes to the trust’s terms.
The duties of a successor trustee will vary by trust, but generally, a successor trustee can:
- Gather trust assets
- Sell trust assets unless trust agreement prohibits this action
- Pay trust expenses
- Hire attorneys and accountants when needed and reasonable
- Distribute trust assets to beneficiaries
However, a successor trustee cannot:
- Alter the trust distribution schedule that the grantor created
- Add or replace trust beneficiaries
- Distribute trust assets to themselves, unless they are making distributions to themselves pursuant to the distribution provisions or trustee compensation provisions included in the trust instrument
Can a successor trustee change a trust?
Generally, a successor trustee is unable to change or restate a trust with different terms. This is because most revocable trusts become irrevocable when the trust grantor dies, which means the trust cannot be altered in any way. This means they can’t add or remove beneficiaries listed by the original trustee or reduce a beneficiary’s share unless the trust document grants them the power to do so. Additionally, they can’t pretend to have that power in an effort to influence beneficiaries to take certain actions (i.e., signing trustee liability release forms).
Though a successor trustee can’t change an irrevocable trust, they may be able to have certain aspects of the trust amended if they can prove to a court that the grantor was coerced into making the decision or made it under duress.
Can a successor trustee change distributions to beneficiaries?
A successor trustee cannot alter the inheritance to your beneficiaries, unless you grant them specific authority in the trust agreement. This is to protect your beneficiaries from arbitrary distribution changes such as increasing or decreasing one beneficiary’s share. Though a successor trustee can’t change the amount of the distributions, they do have control over when and how they pay beneficiaries.
The bottom line
So, can a trustee change a trust? Likely not in any meaningful way. This is mainly due to the fact that most trusts become irrevocable when the trust grantor dies, making it illegal for any changes to be made to the trust.