How To Remove A Beneficiary From A Trust

How To Remove A Beneficiary From A Trust

March 21, 2023

How To Remove A Beneficiary From A Trust

Trustees have certain powers and duties in order to ensure that their responsibilities to the trust and its beneficiaries are met. While the trustee has broad control over the trust’s assets, it is often advisable for them to meet with beneficiaries before making decisions regarding distributions. This can help avoid situations in which beneficiaries feel forced to sell real estate they want to inherit because the trustee feels it is a good way to meet distributions.

The Powers And Duties Of A Trustee

A trustee has a number of powers granted to them by the governing trust instrument and/or state law. However, they must act in good faith and in accordance with the interests of the beneficiaries of the trust. A trustee may mortgage or pledge trust property to pay debts, administration expenses and taxes if the terms of the trust allow it. They also have the power to sell assets, such as real estate if they are salable. They are under a duty to provide clear and up-to-date accounts and information about the trust to the beneficiaries when they request it. They must not favor one beneficiary over another and they should balance competing interests for income and capital. They must also take reasonable care to keep the trust and its property safe, maintain insurance, and ensure that their investment strategy is prudent, balanced and likely to benefit the beneficiaries of the trust. They must also provide timely distributions of trust funds and report to the beneficiaries promptly on any significant changes in the circumstances of the trust.

The Rights Of A Trust Beneficiary

Trusts are legal documents that allow people to transfer their assets to other people, often for a specific purpose. The person who creates a trust (the grantor) designates a trustee to manage the trust for the benefit of beneficiaries. As a result, trust beneficiaries have many rights and can challenge a trustee when they feel the trustee has not performed his or her duties properly. These include a right to question distributions and the ability to obtain an accounting of trust income, expenses, and distributions. 

Generally, a trustee cannot remove a beneficiary unless the trust document specifically states that they can do so. Even then, the removal will have to be approved by a court. When a trustee decides to remove a beneficiary, they must follow state laws and notify the beneficiary in writing of their decision and give them a chance to respond. In some cases, a hearing will be held to allow the beneficiary to defend themselves and present their case.

Grounds For Removal Of A Trustee

If you are a beneficiary or co-trustee and you believe that your trustee is in breach of his or her duties to the trust, you may file a petition with the probate court for removal. However, it is not always easy to convince the court that your cause for removal is reasonable. Rather, it is usually a matter of showing that the alleged breach of trust has been caused by the conduct or behavior of the trustee. For example, the trustee might have failed to provide accountings or other information about the assets of the trust. The trustee might have mismanaged the trust’s funds, thereby wasting or devaluing its value. The trustee may also be in violation of the terms of the trust, which prohibits him or her from using trust property to his or her own benefit. Regardless of the reason, a trustee is bound by his or her fiduciary duty to manage the trust’s assets responsibly. So when a trustee breaches this duty by failing to act or by failing to follow the terms of the trust, the beneficiaries can petition the probate court for removal.

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