Here is a situation you might consider. Your great-great Uncle Cyrus named you
as a beneficiary of a Trust established by his Will. Every month (or quarter or year) you
receive a distribution that you await with anticipation. You never actually read the
documents but you know your cousins have been complaining recently because the
investment company that administers the Trust has had very poor returns or their
customer service is poor and the company does not send reports or does not return
telephone calls. Can the beneficiaries change the Trust and fire the Trustee (the bank or
investment company) that was named in the original document? What are the options?
Another circumstance might demand your attention. You were named Trustee
under a Supplemental Needs Trust for your brother who was seriously disabled. After
years of therapy and hard work your brother now is working full time and completely
recovered. He does not want the restrictions on distribution of the Trust and does not
receive government benefits now nor has he ever nor does he expect to. Further, you do
not want the position of Trustee. Can you and/or your brother do anything about it?
These are the kinds of questions that typically arise under a law known as the
Uniform Trust Act. Pennsylvania adopted its own version of the Act and several other
States have also adapted the law to their specifications. Sometimes you need to go to
Court to get changes to a Trust. On the other hand, sometimes it can be changed by
agreement of the parties or possibly the provisions cannot be changed at all. You and
your attorney have to know something about the law. In summary, the answer is, as in so
many areas of the law affecting individuals “it depends.”
First it should be noted that there are differences among Trusts. For instance
suppose you set up a Trust during your lifetime either alone or with your spouse and
place assets into the Trust. Most commonly this is a Revocable Living Trust. That
means that you or you and your spouse can change it or revoke it at any time during your
life without intervention by anyone and certainly without Court action. What we are
discussing here are Irrevocable Trusts.
The Trusts that make it interesting are the “Irrevocable” trusts. These come about
either because they are established as irrevocable or, in the alternative, they become
irrevocable on the death of the person who set it up. That person, the “Trustor,”
“Grantor,” or “Settlor” can no longer change the provisions of the Trust for the obvious
reason. He is deceased.
If the Grantor is still living, provisions even of an Irrevocable Trust might be able
to be changed by written agreement of the Grantor and all the living beneficiaries without
going to Court. If minors or unborn children are affected, a parent beneficiary may stand
in for the child or children to agree. Once the Grantor dies Court intervention might be
Whether it makes sense to change or revoke a Trust is a question for discussion
with your elder law or estate attorney. Revoking or modifying a Trust is the most
common reason our office goes to Court and the results are often satisfying since they
might take an old document that no longer accomplishes its original purposes and provide
options for everyone concerned.
The Trust might, for instance, have specified certain types of investments and the
instructions could be outdated. The Trust might no longer be needed because of
changing conditions or there might not be enough money in the Trust to make its
administration worthwhile. The Trust may have been drafted in such a way that, with
changes in the law, it can no longer accomplish its goals.
Under some of these circumstances it may be necessary to file a Petition in what
is known as Orphans Court to modify or revoke the Trust. This does not have to be
contentious. Often the parties agree but need permission to change or revoke the Trust.
The issues are taken to Court and resolved.
Options under the Uniform Trust Act may save time and create more flexibility
for beneficiaries and their families.
Esquire, Colliton Law Associates, P.C. Janet Colliton has practiced law for over 38 years, 37 of them in Chester County, Pennsylvania, a suburb of Philadelphia. Her practice, Colliton Law Associates, PC, is limited to elder law, Medicaid, including advice, applications and appeals, and other benefits planning including Veterans benefits, life care and special needs planning, guardianships, retirement, and estate planning and administration.