Trusts play an important role in estate planning. They make sure your wishes are carried out after your passing. Trusts provide a structured way to manage and protect your assets, safeguard your beneficiaries, and avoid probate.
However, one question remains: Can a trustee override a trust?
Let’s examine the legal authority governing trusts to see if this scenario is possible.
The Role of a Trustee
A trustee is a person or entity named to manage the assets according to the trust’s terms. This is a fiduciary role. In other words, the trustee is legally bound to act in the best interests of the beneficiaries and must abide by the trust document.
The trustee’s job is to carry out these instructions, not to override them.
Wisconsin’s Uniform Trust Code
Any trust must follow Wisconsin’s Uniform Trust Code (UTC). These guidelines detail how trusts are created, modified, or terminated. Under the UTC, trustees have a duty to act:
- In good faith
- In accordance with the terms of the trust
- In the best interest of the beneficiaries
A trustee cannot arbitrarily ignore or override the terms of a trust. However, there are some exceptions.
Court-Approved Trust Modifications
In some cases, a trustee can petition the court to modify a trust. However, this can happen only in certain conditions, such as:
- Unforeseen circumstances: If circumstances arise that the trust creator (the settlor) could not have anticipated, and adhering strictly to the trust terms would defeat its purpose, the court may allow modifications.
- Tax advantages: A trustee may seek changes to ensure the trust remains tax efficient.
Keep in mind that these modifications require court approval. Also, any changes will need approval from the beneficiaries.
Uneconomical Trust Termination
Sometimes, if a trust’s value becomes too small to justify its administrative costs, the trustee can request to terminate it. Once again, this requires court approval. When granted the request, the trustee must distribute the remaining assets per the terms of the trust.
Decanting a Trust
Under Wisconsin law, a trust can be decanted. What does that mean? In these situations, the assets from an existing trust can be moved into a new trust with more favorable terms. While this might seem beneficial for the beneficiaries, they still need to approve the move. Plus, decanting a trust must align with the purpose of the original trust. This process cannot be used to override a trust or act contrary to the settlor’s intentions.
Amendment or Revocation by the Settlor
If the trust is revocable, the person who created the trust has the right to amend or revoke it during their lifetime. The trust becomes irrevocable when that person passes away, and the trustee must follow the existing terms.
What Happens If a Trustee Violates the Trust?
If a trustee attempts to override or disregard the trust’s terms without legal justification, they are breaching their fiduciary duty. When this happens, there are serious consequences.
In some cases, the beneficiaries can petition the court to remove the trustee. The trustee can also be held personally liable for damages or losses resulting from their breach of duty.
How to Protect the Trust
Trustees are bound to follow the trust’s terms. For this reason, you want to make sure that all expectations are clearly outlined when establishing a trust.
Any ambiguous language could leave your wishes open to interpretation and cause an issue with your trust’s administration. When you work with an experienced estate planning lawyer, they will provide clarity and guidance during this time.
The purpose of a trust is to provide peace of mind and not cause confusion or conflict. Working with an attorney can help ensure that your wishes are honored.
Get Assistance for Your Estate Planning
Can a trustee override a trust? Not legally. If a trustee has broken their fiduciary role, they could face serious consequences.
If you ever find yourself in a situation where you feel the trust’s terms are not being honored, you need legal guidance.
We can assist at Collins Law Firm, whether you are ready to establish a trust or have questions about the terms. Our experienced estate planning team helps individuals like you to build and protect your legacy. Schedule your free and confidential consultation today by contacting us or calling (414) 207-6292.