When creating an estate plan, one of the most important decisions is selecting a trustee to manage assets for beneficiaries. The trustee has significant control, so any changes warrant scrutiny.
There are several warning signs that indicate potential suspicion with a change of trustee.
Exploiting lack of capacity
If the grantor alters trustees in their old age or during a serious illness, concerns of manipulation arise. Similarly, if a beneficiary suddenly becomes a trustee after the grantor’s incapacitation, there may be some undue influence. Drastic changes in trusteeship without a clear rationale can also raise eyebrows.
Exhibiting financial abuse
Sudden trustee switches, especially involving an abusive or controlling beneficiary, may indicate financial elder abuse. If an aging grantor appoints an unreliable beneficiary as a trustee, it can lead to mismanaged or stolen assets. Even if the beneficiary was trustworthy initially, situations change over time. An external trustee may be safest for avoiding abuse.
Not considering input on changes
Beneficiaries and others close to the grantor should provide input on major trustee changes. Their protest or approval can reveal coercion. Grantors can even include trustee modification requirements in trust documents when created. This helps define parameters for modification to minimize risk factors.
By approaching changes of trustee cautiously and involving key parties, you can reduce the risk of suspicious modifications. Cases such as Priscilla Presley’s challenge of her daughter’s estate occur as a result of uncertainties and suspicion. While the courts upheld Lisa Marie’s appointment of her daughter Riley as trustee, some cases have cause for modification.
