Northwestern Mutual
< Back to Insights & Ideas

Ask the Retirement Expert: My Sister Is a Trust Trustee. Can She Change the Terms?

Mark McLennon, J.D., CPA, CFP® •  August 19, 2016 | Your Finances, Home and Family, Ask the Expert

By Mark McLennon, J.D., CPA, CFP®

As vice president of Investment Products and Services business development, Mark is the chief liaison for IPS to the company’s Planning and Sales, Advanced Planning, Specialty Markets, Marketing and Meetings functions. Mark’s role also includes oversight of the fee-based financial planning program, IPS meeting development, IPS communications, and overseeing departmental growth initiatives.

Each week our Northwestern Mutual retirement experts answer your questions. This week’s question:

My sister is named as trustee. Can she change the terms of a trust?

Although certain types of trusts have a lot in common with each other, every trust is unique, as a trust is a document specifically designed to instruct the trustee how to carry out the wishes of the particular person who set it up, the grantor. The answer to your question can be answered only by reading the specific trust in question. If the interest in the terms of the trust is more than one of just curiosity, it should be read and interpreted by an attorney skilled in that discipline.

A trust typically will spell out the rights and duties of the trustee, which should include whether that person can amend the terms of the trust. If the trust is not clear, the answer is determined by state law.  State laws also vary and need to be reviewed by an attorney as well, but if the specific right to amend is not included in the trust, the likelihood the trustee can change the terms of the trust may be low.

A trustee may be given the ability to amend the trust, but if the trustee is also a beneficiary or can make him- or herself a beneficiary through amendment, there could be potential tax consequences to the trustee. So in many cases, that right is not given. Again, an attorney would need to be consulted.

Even if the trustee cannot amend a trust, often the trustee may be given some latitude in how he or she carries out duties as trustee, such as how distributions are made or how investments are made. Again, every trust is different, and a professional advisor is the best way to answer specific questions related to a particular trust.

Do you have a question for our Northwestern Mutual retirement experts? Click here to send your questions.

Rate This Article