In this article we explain Illinois guardianships and revocable living trusts and answer the question, “what powers does a guardianship have over the ward’s trusts?” We answer, “what happens to a revocable living trust if a guardian is appointed for the grantor?” and “what power does a guardian have over a ward’s revocable living trust?”
For some foundational information about guardianship, check out our article: Illinois Guardianship Explained. For more on revocable living trusts, check out: Illinois Revocable Living Trusts Explained.
When an individual creates a revocable living trust, he or she is known as the “grantor” of the trust. Generally, the grantor of the trust is also the initial trustee and beneficiary of the trust. The trustee is the person responsible for managing the assets of the trust for the benefit of the beneficiaries according to the terms of the trust. This means that while the grantor is of sound mind, he or she will generally manage trust assets just like any other assets in his or her individual name.
If a guardian is appointed for the grantor of a revocable living trust, this generally means that the grantor has been adjudicated by the court as being legally disabled. Depending on the wording of the court’s order and the terms of the trust, an adjudication of legal disability will generally mean that the person named in the trust as successor trustee will take over the management and distribution of trust assets. In most cases, the grantor will remain the beneficiary of the trust.
This means that the new trustee will now be in charge of managing trust assets for the benefit of the disabled adult. The new trustee may be the same person as the guardian for the disabled adult, or the trustee may be a different person. If the trustee is a different person from the guardian, the trustee will maintain control over assets that are owned by the trust while the guardian of the estate will have control over assets owned by the disabled adult outside of the trust.
A guardian generally does not have the power to revoke his or her ward’s revocable living trust. However, the guardian does have the power to create a revocable living trust on the ward’s behalf and fund it with trust assets to effectuate the ward’s wishes.
A guardian does not have the power to compel a trustee to distribute funds from a disabled adult’s trust to the guardian. However, if the guardian believes that the trustee is abusing his or her discretion with respect to distribution or management of the assets of the trust, the guardian may petition the court to have the trustee removed or to order the trustee to take certain actions.
Courts have the power to amend the terms of revocable trusts to effectuate the wishes of the ward, including changing beneficiaries.
The guardian has a right to accountings of trust assets, liabilities, income and expenses from the trustee.