When you might go to court because of a trust

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 is now 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 necessary.

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.

Janet Colliton, Esq. is a Certified Elder Law Attorney and limits her practice to elder law, retirement and estate planning, Medicaid,

Medicare, life care and special needs at 790 East Market St., Suite 250, West Chester, Pa., 19382, 610-436-6674, colliton@ collitonlaw.com. She is a member of the National Academy of Elder Law Attorneys and, with Jeffrey Jones, CSA, cofounder of Life Transition Services LLC, a service for families with long term care needs. Tune in on Wednesdays at 4 p.m. to radio WCHE 1520, “50+ Planning Ahead,” with Janet Colliton, Colliton Elder Law Associates, and Phil McFadden, Home Instead Senior Care.

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