The simple answer is yes, a Trustee can also be a Trust beneficiary. The Antonoplos & Associates trust and estate lawyers have over 20 years of experience helping clients in DC, Maryland, and Virginia set up revocable trusts, irrevocable trusts, asset protection trusts, spendthrift trusts, generation-skipping trusts, life insurance trusts, disclaimer trusts, and Qdot trusts. However, there are a few important things to consider before choosing to name a beneficiary as a trustee. Thus, by keeping track of transactions linked to the trust, not using trust assets for personal reasons, and justifying why you paid yourself for certain actions, you prevent yourself and other beneficiaries from losing a portion of the trusts assets for no reason. Answer: The law does not give the trustee an automatic power to have a beneficiary removed from a trust. A revocable trust can also be modified by the owner, where an irrevocable trust can’t. However, when a trustee who uses their powers to unfairly benefit their own interest over the other beneficiaries, it is also a breach of trust. The most common situation where a trustee is also a beneficiary to the trust occurs when someone names their spouse or oldest child as the trustee to the trust. So this is a third common situation where the trustee is also a beneficiary. For example, in a family trust created by two spouses, the surviving spouse will almost always serve as both a trustee and beneficiary. This is a joint arrangement, for instance, when married couples own a … For a free consultation, call (424) 320-9444 or visit: Can a Successor Trustee Change or Amend a Trust? If you feel that a conflict of interest exists with a Trustee who is also a Trust Beneficiary as described above, you may contact Florida Probate Litigation Attorney Thomas Upchurch or call at (386) 320-6169 to discuss the Trust litigation matter. Many trusts have the same people fulfilling multiple roles. A structure that can make sense (or not) Joseph Carpio, associate at Polak McKay & Hawkshaw in Ajax, Ont., says about 80% of the estates he comes across have an executor who’s also a beneficiary. Generally, the creators of a trust will make clear in the trust document how a trustee should be compensated. No. The surviving spouse, for example, is almost always the successor trustee and beneficiary of a family trust. With this knowledge and experience, we can help with any legal issues that occur from setting up your trust. In principle, there is nothing that prevents a beneficiary from being a trustee. The trustee may also be a beneficiary, but not the sole beneficiary unless there is more than one trustee. Thus, if a trustee is also one of the beneficiaries of a trust, conflicts of interest can occur. The Trustee holds that property for the trust beneficiaries. Partnerships and unincorporated associations can also be beneficiaries. For example, in a family trust created by two spouses, the surviving spouse will almost always serve as both a trustee and beneficiary. Beneficiaries may have an entitlement to trust income or capital that is set out in the trust deed or they may acquire an entitlement because the trustee exercises a discretion to pay them income or capital. However, to avoid legal issues between family members, it is important to understand the difference between a trustee and a beneficiary and when it makes sense to appoint someone who will be in both of these positions. So even though a Trustee can also be a beneficiary, it is not always a good idea to do so. Who Inherits Property if There Is No Will? Trustees must abide by the terms established by the trust creators and cannot take assets for personal use. Can a trustee also be a beneficiary? Setting up an estate plan may involve creating both a will and a trust. Consider also including removal provisions in your irrevocable agreement, establishing under which circumstances to remove a trustee and identifying who has the ability to do so. The Professional Trustee’s Guide to Estate Contests and Disputes. Individuals with this designation are the ones that step in to manage the assets of the estateafter someone has passed away or become incapacitated. If you are a child named as Trustee If You Are Also a Beneficiary. To avoid disputes, trustees that are also beneficiaries should: Even if a trustee is a neutral third party, beneficiaries may still be upset with how the trustee distributes assets. However, things can get complicated in such a scenario when the … The parents do this because they are confident that the adult child can arry out the terms of their trust. Yes, an Executor of a Will can also be a Beneficiary. However, the beneficiaries of a trust cannot make any management or disbursement decisions regarding the assets in the trust. It can work, but mixing those roles can create complications for an estate. You should consult an attorney for advice about your specific legal matter. In that case, the Trust Property would no longer be held on trust. A trust must have at least one beneficiary but may have an unlimited number of beneficiaries. But should a trustee also be a beneficiary is a different story. The trustee may also be a beneficiary, but not the sole beneficiary unless there is more than one trustee. Can a Trustee Also Be a Beneficiary in Florida? Finally, for more information regarding can a trustee be a beneficiary, contact us at 202-803-5676. Sometimes, however, we see married couples give the surviving spouse, who often is also acting as trustee, a general or limited power of appointment, which allows the surviving spouse/trustee to make changes to the trust, including the power to remove or change beneficiaries, and/or change the distribution of trust assets. For More Information, CLICK HERE. Depending on the terms of the trust, a beneficiary may receive their inheritance at the time the creators pass, or the assets may remain in trust for a specified amount of time. Transparency and bookkeeping will be the primary focus. It's quite common to be both a trustee and a beneficiary of a trust. The Following is a Transcript of this Video. The trustee, the person or entity who owns and manages the property, must meet Texas' legal requirements for trustees. RMO LLP serves clients in Los Angeles, Santa Monica, Ventura, Santa Barbara, San Francisco, Orange County, San Diego, Kansas City, Miami, and communities throughout California, Florida, Missouri, and Kansas. One person can play multiple roles. The potential complications and consequences should be discussed in detail with your estate lawyerbefore you make a decision. The main time you would NOT want a trustee to be a beneficiary is when the trust contains provisions staggering the distribution of assets to the beneficiary. As a trust beneficiary, you may feel like you are at the mercy of the trustee, but depending on the type of trust, trust beneficiaries may have rights to ensure the trust is properly managed. I can't think of any reason why a company owned by a trust cannot also be a beneficiary of that trust. RMO LLP serves clients in Los Angeles, Santa Monica, Ventura, Santa Barbara, San Francisco, Orange County, San Diego, Kansas City, Miami, and communities throughout California, Florida, Missouri, and Kansas. Though not the case in most instances, there are times when a trust’s beneficiary is also named the trustee. These rules help to ensure that the trust will be created and managed in a … Reading Time: 3 minutesTrust law involves many principles, obligations and rules. That means one person can be both the Trust manager (Trustee) and benefit from the Trust (beneficiary). If you have a trust dispute, hiring the best attorney familiar with the local probate court where your case is going to be heard and decided often will get you the best result. Call: (424) 320-9444 It’s also common practice for one adult child to serve as the trustee of a trust after the parents pass even if there are other kids. Many people use living trusts to guide the inheritance process and avoid probate. Can the Executor of a Will Take Everything? Beneficiaries may have an entitlement to trust income or capital that is set out in the trust deed or they may acquire an entitlement because the trustee exercises a discretion to pay them income or capital. The simple answer is yes, a Trustee can also be a Trust beneficiary. An irrevocable trust is intended to be just that: Irrevocable. It also means you have a number of A Sacramento living trusts attorney at the Northern California Center for Estate Planning & Elder Law explains when and how a beneficiary may be able to remove a Trustee. RMO, LLP A structure that can make sense (or not) Joseph Carpio, associate at Polak McKay & Hawkshaw in Ajax, Ont., says about 80% of the estates he comes across have an executor who’s also a beneficiary. This is an ideal situation for families who want a trust to protect their life insurance benefits and reserve them for the cost of caring for their kids, or as a future inheritance for their (currently) minor children. Most notable of being that if a beneficiary sues the trustee, the trustee uses trust assets to pay for legal fees. Trust and estate laws are complex. Furthermore, a breach of trust does not have to be intentional. For example, a husband may create a trust with the intent of splitting the assets between his wife and kids. Many times a child of the Trust settlor will be named Trustee, and also as a Trust beneficiary. A similar situation may occur when a couple places their assets into a joint trust. The beneficiary-trustee is protected from creditor claims to the extent the beneficiary-trustee’s discretion is protected by an ascertainable standard as defined in the relevant Internal Revenue Code sections. If the trustee will hold real property there could be stamp duty issues on the changing of the trustee, so make sure you seek legal advice on how to structure the trust deed to avoid this. It all depends on the grantor’s goals and often on the tax impact of the grantor’s choices. Nearly every revocable, living Trust created in California starts with the settlor naming themselves as Trustee and beneficiary. For example, the trust deed may state that neither the settlor nor a beneficiary can become a trustee. It can work, but mixing those roles can create complications for an estate. One way to avoid merger is to name a different person as trustee to act after Joe dies. The short answer to the topic question is yes, in California, a trustee can also be a beneficiary, but there are several serious concerns you need to be aware of to ensure your trust doesn't become legally invalid. This is a breach of fiduciary duty. The trust document may provide for the trustee to receive a certain percentage of the value of trust assets, an hourly rate or a flat fee. You may wish to place your life insurance policy in a trust and appoint either a legal professional or trusted friend/family member to disburse the proceeds according to your wishes. Find out if you can name the same person to be both your trustee and executor of … Many families like to name a family member as the trustee to their trust. It is often the case that the successor trustee is one of the beneficiaries. Commonly, beneficiary disputes will occur when one beneficiary questions the trustee’s objectivity. The short, technical answer is “yes.” Nothing in Florida law prohibits a beneficiary of a trust from also serving as trustee. But in some types of trusts, a trustee cannot be a beneficiary. It is very common for a trustee to also be a beneficiary. So even if the trustee does not purchase something from assets that were meant to go to or be split among all the beneficiaries, a breach of trust can occur if the action was prohibited in the terms of the trust. Secondly, neither the settlor nor trustee can be a beneficiary of the trust. A trustee can only use trust assets to benefit the trust beneficiaries. I have proposed the following structure; parts of this structure already exist, new entity is ABC Pty Ltd; - XYZ Trust has 100% shareholding in new company ABC Pty Ltd. For example, in a typical revocable inter vivos trust, it is quite common for the person establishing the trust to be the initial trustee and the principal beneficiary. The beneficiary also has the right to make sure that the trustee(s) are behaving in an accurate manner, etc. Because the trustee oversees and manages the assets within a trust, to be able to serve as a trustee in the United States, a person must be at least eighteen years old and not be experiencing any forms of incapacity. Have a question or want to schedule a free consultation? Naming a beneficiary of your trust such as a spouse or child as trustee can offer many benefits. Can a Trustee be a Beneficiary Yes, a Trustee can also be a Beneficiary of a Trust. Is it common? There is no longer a split between the trustee’s interest and the beneficiary’s interest. We do get the question from time to time can my brother who is the trustee of our parents’ trust, can he also be a beneficiary of the trust? A trustee is the person or entity responsible for managing and distributing trust assets. Who can be termed as Beneficiaries A class of persons can be named the beneficiary of a trust as long as the class is definite or definitely ascertainable. Yes, a beneficiary can also be a trustee so long as they are over the age of 18 and of sound mind. The beneficiary of a trust can be an individual, an entity (such as a charity or political organization), or even the family pet. This column first appeared in the San Antonio Express News and other Hearst Newspapers on April 3, 2020. The short answer is yes, a trustee can also be a trust beneficiary. There are Generally, a trustee must ensure that the trust assets are distributed as the trust creators intended. This is extremely important for a number of reasons. What is an Appointment of a Successor Trustee? It is quite common that a trustee will also be a beneficiary of a trust. In California, Trustees can also be beneficiaries of a Trust. The successor could even be the SOLE beneficiary. Dear Mr. Premack: I have been told I cannot be the grantor, trustee, and beneficiary of my living trust because Additionally, for general information regarding trust and estate law, check out our blog. Can a Trust be a Shareholder of a Company who is also a beneficiary of that same trust? You can provide it if a beneficiary asks you for it. It is permissible for the Trustee to also be a Beneficiary so long as the Trustee is not the only beneficiary as, otherwise, both the legal and beneficial ownership would vest in the same person In that case, the Trust Property would no longer be held on trust. While it is usually OK to name a beneficiary as the A beneficiary of a trust can also serve as the trustee or executor. Yes. For example, unless the trust document permits it or a trustee obtains special approvals, trustees cannot: If you suspect a trustee is stealing from a trust, engaging in self-dealing, or you are not receiving the assets you are entitled to receive, you should contact a trust litigation attorney as soon as possible before the assets are gone and no longer collectible. Most parents will name one or more of their children to be the trustee and that trustee will also be a beneficiary. Overall, when a beneficiary is not a trustee, the trustee of a trust does not receive any of the trust’s assets once the grantor dies as the assets all go to the beneficiaries of the trust. In fact, most trustees are also beneficiaries of the trust. Specifically Probate Code Section 16000 states that a trustee has a duty to administer the trust according to the trust instrument. Yes, you can name someone as both the successor trustee and the beneficiary. 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