Can a Husband Be a Trustee for His Wife's Irrevocable Trust?

By Marcus Schantz

Once an irrevocable trust is established and funded, it may not be modified or terminated without the consent of the trust beneficiary. Hence it is critical to set up the trust very carefully. An attorney can explain your options and should be consulted. Because the role of the trustee is to administer your trust, you should carefully consider whom you choose. Anyone can be the trustee of an irrevocable trust, including your spouse.

Once an irrevocable trust is established and funded, it may not be modified or terminated without the consent of the trust beneficiary. Hence it is critical to set up the trust very carefully. An attorney can explain your options and should be consulted. Because the role of the trustee is to administer your trust, you should carefully consider whom you choose. Anyone can be the trustee of an irrevocable trust, including your spouse.

Irrevocable Trust

Property held in a marital trust avoids estate tax if your spouse is the sole beneficiary. However, property in a non-marital irrevocable trust can pass to multiple beneficiaries without estate taxation. Irrevocable trusts can also protect assets from being used in determining Medicare eligibility. Once an irrevocable trust is funded, the trust property cannot be taken back by the grantor without the consent of the beneficiary. It is legal to name a beneficiary as trustee, such as a spouse.

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Duty of the Trustee

A trustee's duty is to hold property on behalf of another, the beneficiary, during and after the life of the grantor. A trustee can use property only as outlined in the trust. Trusts typically contain specific instructions concerning how the property is to be managed. However, such instructions can range from broad to very specific.

Spouse as Trustee

Choosing a spouse to be the trustee of an irrevocable trust has advantages. For instance, a spouse likely has a thorough understanding of your wishes. Ideally, there is also a strong sense of trust between spouses. Thus, you may feel a sense of reassurance knowing your spouse will handle your affairs appropriately. However, you should think carefully before naming your spouse as trustee. For instance, if your spouse suffers from dementia or has a chemical dependency or gambling problem, it would be wise to choose a different trustee.

Trustee Removal and Replacement

A well-written irrevocable trust should provide a mechanism for the grantor to remove and replace a trustee during the grantor's lifetime. However, if the grantor is dead or cannot act, a beneficiary must petition the probate court to have the trustee removed. A showing of why the current trustee is unfit must be made by the petitioner. The court may also be offered potential replacements. However, if an alternate trustee was named in the trust, that person usually becomes the trustee if the petition is approved by the court.

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The Difference Between a Grantor & a Beneficiary

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Roles of a Trustee

A trustee manages property for beneficiaries according to the terms of a trust. Generally, a trustee is appointed by a person, called a grantor or settlor, who establishes and funds the trust. The settlor transfers legal title of assets to the trustee so she may manage and distribute them for named beneficiaries. A trustee's role includes responsibly and honestly handling trust assets and ensuring the purpose of the trust is carried out.

Types of Living Trust

A trust is a legal instrument, created by a settlor, in which property is held by a trustee for the benefit of another party, known as the beneficiary. Trusts can be living -- effective during the settlor's lifetime; or testamentary -- part of the settlor's will and effective only after his death.

Does a Living Trust Change When a Person Remarries?

A living trust is created by a grantor when he transfers property to a trustee to hold and manage for the benefit of specific beneficiaries. When a person creates a living trust, it is normally a part of a broader estate plan. Oftentimes, the creator names himself as beneficiary and initial trustee, but when he passes away, the trust then conveys his property to other designated beneficiaries instead of by will. If the creator of the trust remarries, the terms of the trust generally do not change automatically. However, many times the trust can be altered to include a new spouse as a beneficiary to the trust.

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