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This question came from one of our users:
"A revocable trust was set up and funded by using a Fidelity brokerage account. The grantor and trustee (same individual) no longer wants to be responsible for the trust. The grantor wants the funds kept in the account but to be transferred to another individual. How will this be possible?"
If a grantor is also the trustee of a revocable trust, they can change who the trustee is (if they want to replace themselves) and/or who the beneficiary(ies) of the trust are (if they want the trust assets to go to someone else).
What is a Revocable Trust?
A revocable trust is attractive if a grantor wants to retain control over the assets or property in the trust during their lifetime. A grantor can make changes to the trust, should they wish to do so, or they can revoke the trust altogether. This type of trust offers the most flexibility. Making a change (amendment) to the trust is relatively simple and easy to do.
What are the Benefits of a Revocable Trust?
- The grantor retains control over the trust assets
- Easily make changes to the trust
- Can revoke the trust at any time
- Retains its privacy as a trust is not a public record
- Cost savings if probate is avoided
- Option to create post-death trusts
- Fully funded trust is easier to administer
What is the Role of a Trustee?
Typically, in a revocable trust, the grantor is also the trustee. The primary duty of the trustee is to hold the trust assets, administer them in the best interest of the beneficiaries, and adhere to the terms of the trust.
The trust document itself typically outlines the duties of the trustee, the trustee’s powers, and any restrictions on those powers. The trustee will have duties relating to the administration of the trust and separate duties if the trust is terminated and distribution is required.
What are Typical Duties During the Administration of the Trust?
- Duty to administer trust in good faith
- Duty of loyalty
- Duty to deal impartially
- Duty to exercise reasonable care
- Duty to invest prudently
- Duty to only incur reasonable costs
- Duty to preserve and protect property
- Duty to delegate prudently
- Duty to take control
- Duty to keep records
- Duty to keep trust property separate
- Duty to defend actions
- Duty to enforce claims
- Duty to inform and account
- Duty to pay income to beneficiaries
What are Typical Duties After Termination of the Trust?
- Duty to transfer title or possession
- Duty to account
Can a Trustee Resign?
Yes, under the Illinois Trust Code, a trustee may resign: (1) upon notice to the settlor (grantor), if living, to the beneficiaries who are distributing or permissible distributes of trust income, and all co-trustees; or (2) with the approval of the court. 760 ILCS 3/705. The terms of the trustee should provide the requirements for appointing a new trustee if there is no named successor trustee.
Designed for general information use only. The content above does not constitute legal advice or the formation of an attorney/client relationship.
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