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Can a trustee add or remove a beneficiary from a trust?

On Behalf of | Dec 27, 2022 | Estate Planning |

While wills come with their benefits, any asset that is included in a will is still subject to probate, which can be a lengthy, public and costly process. Basically, probate is the process of distributing the decedent’s assets as outlined in their will upon death. 

If you do not want certain assets to go through probate, you should consider setting up a trust. Done right, a trust can help protect your estate from certain estate taxes and ensure privacy among other benefits. Unfortunately, it is not uncommon for trustees and beneficiaries to lock heads over the trust. As such, having precise answers to questions like whether or not the trustee has the power to add or remove a beneficiary from a trust is crucial. 

Understanding the duties of a trustee

Basically, a trustee is an individual or entity named in the trust and charged with the task of managing the trust on behalf of the settlor. Per the trust’s instruments, the trustee is also responsible for distributing the assets in the trust to the designated beneficiaries upon the settlor’s death. 

So can a trustee remove the beneficiary?

In most cases, the trustee cannot amend a trust, especially if the trust is irrevocable. This ensures that the beneficiaries receive what the settlor intended for them to inherit. 

However, if the trust’s instruments give the trustee the power to make changes to the trust (including designating and removing beneficiaries), then the trustee can make such changes pursuant to the trust’s terms and conditions. This is known as the power of appointment. 

Most people give the power of appointment to their spouses. For instance, if a couple sets up a trust, then the trust may give power of appointment to the surviving spouse who can then make changes to the trust as they deem fit. 

Whether or not the trustee can remove a beneficiary from a trust depends on the provisions of the trust instrument.