Finding a New Trustee: Your Control and Involvement as the Beneficiary of an Irrevocable Trust

Trustees have a fiduciary (legal) responsibility to safeguard and steward the trust assets in accordance with the trust creator’s intentions.

 

From the perspective of both the trust creator and trust beneficiaries, the most important responsibility of the trustee is to ensure that the family / beneficiary receives their intended trust benefits. Unfortunately, some trustees may think and act otherwise. As addressed below, this may signal the need to find a new trustee.

 

When working with the wrong trustee, the beneficiaries / heirs can feel locked out from their wealth and left scratching their heads wondering whether the trustee understands that it’s really their (the beneficiary’s) wealth which the trustee has the privileged role of overseeing. If you’re a trust beneficiary and you feel like you’ve been pushed out of any decision making with the stewardship of your trust, it might be time for you to find a trustee for your irrevocable trust.

 

A good trustee will involve the trust beneficiary in the stewardship of their trust assets.

new trustee

A good trustee will involve the trust beneficiary in the stewardship of their trust assets. A solid trustee / beneficiary relationship is premised upon the trustee’s intimate understanding of the beneficiary, and how the beneficiary’s life intersects with the purposes of the governing trust document.

 

Identifying a new trustee can make all the difference in how a trust is managed. Working with the right trustee can provide you with confidence and peace-of-mind knowing that your assets are being managed to your benefit, in accordance with the trust’s specifications.

 

A good trustee will invest the time and effort necessary to help the beneficiary understand their irrevocable trust. This understanding not only sets the foundation for the beneficiary’s active involvement with their trust, but also equips the beneficiary to plan their life accordingly. A beneficiary lacking the knowledge or understanding of how their trust was designed to work for them may be symptomatic of a trustee who is unwilling to actively involve the beneficiary with their trust. Even though the trust is irrevocable, the beneficiary may still be able to remove and replace the current trustee with a new trustee.

 

A healthy trustee / beneficiary relationship is also premised upon the trustee’s intimate understanding of the beneficiary, especially their goals, concerns, and life circumstances, as well as the beneficiary’s underlying financial picture.

 

This understanding, coupled with the trust’s purposes, sets the stage for the customized management of the trust’s investments, thereby allowing the beneficiary to sleep well at night knowing that their portfolio is managed in accordance with their (the trust beneficiary’s) desires and concerns. If a trustee has simply placed the beneficiary in a one-size-fits-all portfolio, with little regard to the beneficiary’s needs or desires, a new trustee may be called for.

 

Strict & Distant Parent or a Wise & Caring Partner… Which is Your Trustee?

A common symptom of a challenged trustee relationship is when a beneficiary does not understand the trustee’s reasoning for a “no” to a beneficiary’s principal distribution request.

 

All too often, when this occurs, trustee / beneficiary communications break down. Trust beneficiaries begin to feel that they no longer have a voice as to their trust wealth. Under such circumstances, a beneficiary will often comment that working with their trustee feels like dealing with a strict and overly judgmental parent who just does not understand, as opposed to working with a wise and caring partner.

 

This unfortunate result often arises from a flawed process which prevents the beneficiary from engaging directly with those who are making decisions on their behalf. If a beneficiary’s request for access to their trust assets needs to wait for a Committee to convene before a decision can be made, there may be trouble on the horizon, especially if the decision hides behind the veil of those with whom the beneficiary does not have the opportunity to meet or interact. Justifiably so, most trust beneficiaries feel they deserve more than having to deal with this “Wizard of Oz” like approach.

 

A good trustee relationship should operate like a trusted partnership, where the needs of the beneficiary are understood and the trustee is focused upon serving the beneficiary.

 

A good trustee relationship should operate like a trusted partnership, where the needs of the beneficiary are understood and the trustee is focused upon serving the beneficiary. Thankfully, trusts can be moved from one company to another; so, a beneficiary experiencing poor communication can remove and replace the current trustee of their irrevocable trust with a new trustee.

 

Although principal distribution decisions are always to be made within the construct of the governing trust document, some new trustee companies proactively look to involve the beneficiary in the decision making related to their trust wealth. Instead of making decisions outside of the beneficiary’s involvement, these innovative trust companies strive to equip the beneficiary with the information they need to make wise decisions on their own behalf within the context of their trust.

 

With this refreshing approach, the trustee and beneficiary work together toward the beneficiary’s overall good. Due to this focus upon “empowering the trust beneficiary”, this more collaborative model often results in the beneficiary becoming a thoughtful and wise steward of both their life and trust resources, which is presumably exactly what any trust creator would want for the beneficiary of their wealth.

 

Finally, as we all know, life can happen quickly. When life happens, beneficiary needs can arise. A trustee focused upon serving the needs of the beneficiary should be able to respond in a timely manner. Responding in accordance with the trustee’s timing, such as when the decision-making committee meets, can prove justifiably frustrating to a beneficiary of the family wealth. If the beneficiary has lost everything in a fire and literally has nothing at their disposal, waiting a week for a committee to decide whether the beneficiary’s trust resources can be used to get the beneficiary back on their feet will seem like an eternity. Lack of responsiveness is definitely an indication of needing a new trustee.

 

Thankfully, there are trustees that employ a more beneficiary-oriented approach.

 

Trustee Services Independent Approach

If Time for a Change, Look for a Trustee that Embraces a Modern “Open Architecture” Approach

Trustees have a choice as to how they work with trust beneficiaries. If a beneficiary’s trustee regularly takes the position that they always know best, use committees to make decisions in private, avoid input from the beneficiary as to the management of their trust wealth, and/or continually fail to respond in a timely manner to the beneficiary’s requests, it may be time to look for a new trustee for your irrevocable trust.

 

Thankfully, there are trustees and trust companies that embrace a more healthy, intentionally collaborative, “open architecture” approach where they look to include the beneficiary in the decision-making about the beneficiary’s trust assets.

 

Just as a trustee has a choice as to how they serve the trust beneficiary, a beneficiary also has a choice as to who they have serve as the trustee on their irrevocable trust. If change is desired or needed, the governing trust document and State law will set forth how a beneficiary can begin working with a new trustee. Although a beneficiary’s trust is irrevocable, it is often still possible to remove and replace your current trustee.

 

If a trust beneficiary is desiring to remove and replace the current trustee on his or her irrevocable trust, he or she may want to look for an “open architecture” trustee solution. This enables the trustee beneficiary to have more control of and involvement with their irrevocable trust.

 

Contact us if you’d like to learn more about our trustee services.

Helen McAllister

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