Trustees generally do not have the power to change the beneficiary of a trust. The right to add and remove beneficiaries is a power reserved for the settlor of the trust; when the grantor dies, their trust will usually become irrevocable. In other words, their trust will not be able to be modified in any way.
At that stage, you're likely paying court fees to initiate a case as well as legal fees to one or more attorneys to argue the case in front of a judge. Depending on how long the case takes to revolve and the size of your legal team, you could easily end up paying thousands of dollars to remove a trustee.
Removal by trustee
If the trustor is still alive, the trustees should express the problem to the trustor and ask that the other trustee be removed. If the trustor is deceased or incapacitated, the trustees should convey the problem to the beneficiaries and ask the beneficiaries to join in seeking removal.
It can take up to a year or longer to remove a trustee from a trust. That said, if there are concerns that a trustee could cause harm to the trust while trustee removal litigation is taking place, then the court may suspend them until it can decide the case.
In a revocable trust, the grantor (the person who creates and funds the trust) can remove a trustee without permission from anyone else. To do so, they should formally notify the trustee that their services are no longer needed. The grantor can then name a new trustee.
Depending on the complexity of the case, it may cost anywhere from a few thousand dollars to $100,000 or more to dispute the terms of a trust.
In most cases, a trust deed generally offers two processes for the removal of a beneficiary. Most commonly, the beneficiary can sign a document to renunciate all interests as a beneficiary. Otherwise, the trustee may have discretionary power to revoke the beneficiary.
Steps to Disinheriting Someone in California
Explicitly State Your Intentions: In your will or trust, include a clear and explicit statement indicating your intention to disinherit the specific individual. Simply not mentioning them might not be sufficient, as it could be interpreted as an oversight.
If your goal is to remove someone as a beneficiary, then you have two options. First, you can redistribute the inheritance among your other beneficiaries. Second, you can name a new beneficiary to take over that portion of your estate. Ultimately, this choice is up to you.
A trustee typically has the most control in running their trust. They are granted authority by their grantor to oversee and distribute assets according to terms set out in their trust document, while beneficiaries merely reap its benefits without overseeing its operations themselves.
Amendment Costs: Modifying a trust incurs additional expenses. Amendments cost between $200 and $500 each time, depending on the attorney's rates and the complexity of the changes.
Under California law, embezzling trust funds or property valued at $950 or less is a misdemeanor offense and is punishable by up to 6 months in county jail. If a trustee embezzles more than $950 from the trust, they can be charged with felony embezzlement, which carries a sentence of up to 3 years in jail.
While a revocable trust may allow a trustee to change beneficiaries, they can't do the same with irrevocable trusts. Generally, when a trust is created, the grantor retains the right to make alterations to the trust as they wish. So, they can name the trustees and beneficiaries of the trust and change them at any time.
Selecting the wrong trustee is easily the biggest blunder parents can make when setting up a trust fund. As estate planning attorneys, we've seen first-hand how this critical error undermines so many parents' good intentions.
Final Beneficiaries are those named in the trust deed as those who will benefit only on the date that the trust is wound up, unless the trust assets have already been fully distributed to one or more of the discretionary beneficiaries.
You can reduce the likelihood of someone contesting a Will by leaving them a small gift. This may dissuade them from further action once they realize how costly the process is and how unlikely it is they'd win.
The ability of a beneficiary to withdraw money from a trust depends on the trust's specific terms. Some trusts allow beneficiaries to receive regular distributions or access funds under certain conditions, such as reaching a specific age or achieving a milestone.
A disclaimer is an heir's legal refusal to accept a gift or a bequest. The disclaiming party does not have the authority to direct who inherits their share. If you properly execute a disclaimer, the asset disclaimed will pass to whoever would have received it had you died before the person who left the asset to you.
Any party with a reasonable interest in the trust—such as co-trustee or a beneficiary—must file a petition with the probate court requesting that it remove the trustee. If the court accepts the petition, they will schedule an evidentiary hearing.
If the settlor and all beneficiaries consent:
If any beneficiary does not consent to change or end the trust, the other beneficiaries, with the consent of the settlor, can petition the Court to partially change or end the trust as long as the interests of the beneficiaries who do not consent are not seriously affected.
As noted in the previous section, an executor cannot change a will. This means the beneficiaries who are named in a will are there to stay. Put simply, they cannot be removed, no matter how difficult or belligerent they are being with the executor.
The Challenge of Contesting a Trust
They live with it, manage their assets according to its terms, and may even adjust it as their life changes. This creates a stronger presumption of validity for the trust, making it more difficult to contest.
Here are two potential costs to consider: Simple amendments, like changing a beneficiary or trustee, can range between $300 to $500. More substantial changes, such as a complete restatement of the trust to reflect significant alterations, could exceed $2,000.
Trusts are an excellent estate planning tool for Californians as they provide asset protection. Although someone generally can't bring a lawsuit against a trust, filing a claim against the trustee can occur.