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Can The Trustee Also Be A Beneficiary? Yes Or No!

Creating a trust is an excellent way to pass on the estate to the beneficiaries. However, the part where individuals face problems is nominating a trustee. Questions like who can be the trustee, whether a trustee can also be a beneficiary, etc., always ring the bell in the mind.

Don’t worry! Leave all your worries to us, and we’ll answer all your questions.

Below, we’ll explain the difference between a trustee and a beneficiary and whether one person can be both. We’ll also offer tips on selecting the right person to manage the trust as a trustee.

What Is A Trustee & A Beneficiary? 

A trustee is one of the most important parts of a legal trust arrangement. When someone creates a trust, it mainly involves three parties: the trustor, the trustee, and the beneficiaries (who can be one person or more).

The trustor creates the trust, while the beneficiaries are the individuals for whom it is created. The trustee plays a crucial role between the two parties by holding and administering the estate until the beneficiaries meet the conditions set by the trustor.

These conditions can vary based on the purpose of the trust. For example, if the trust is created for the well-being of an incapacitated person, the assets will only be used for that purpose, and the trustee will ensure that the terms are followed.

Can A Trustee Also Be A Beneficiary?

Yes, a trustee can also be a beneficiary; there are no legal restrictions prohibiting someone from fulfilling both roles. Just remember, it’s impossible if only one beneficiary and one trustee are involved in the trust.

In other words, a sole beneficiary cannot act as the trustee. However, If there are multiple beneficiaries and trustees, you can nominate a beneficiary from your trust to serve as a trustee alongside others.

Potential Conflicts For Nominating Beneficiary As A Trustee

Although nominating a beneficiary as a trustee is possible, legal experts don’t suggest it because of potential conflicts. The beneficiary as a trustee arrangement is suitable only when you’re sure no other beneficiary will object to this decision in the future.

When other beneficiaries know that one is a trustee, it can often lead to disputes. It’s because they might think you don’t trust them to bear this responsibility.

Furthermore, trustees can misuse their power to create conflicts. For example, a trustee who’s also a beneficiary might make decisions that benefit their interests. Whatever the cause, this decision can lead to long legal battles. This is why it’s best to avoid it!

Can A Beneficiary Be A Trustee of An Irrevocable Trust?

An irrevocable trust is a type of trust that cannot be revoked once it’s created. Once the trustor sets up the trust with all the conditions they want, the assets in the trust are no longer the trustor’s property.

Since it is not the trustor’s property, it can’t be changed. Yet, despite these strict rules, a beneficiary can be a trustee of an irrevocable trust. The only requirement is that there must be more than one trustee and more than one beneficiary.

Who Is The Best Person To Be A Trustee?

You can nominate any individual as trustee of your trust. It can be from your family, friends, relatives, or someone you trust – the decision is yours. However, they must meet some requirements.

For instance, the person you’re considering nominating must be an adult and mentally competent. Besides these two conditions, you should consider the points below:

  • Responsible: The best person to be a trustee is someone responsible. Remember that the trustee will be responsible for everything from estate administration to distribution. This is why choosing a person responsible enough to keep up with all the tasks is important.
  • Have good knowledge: It’s not important for a trustee to be a financial guru or legal expert, but having basic knowledge is beneficial. Otherwise, the trustee won’t be able to manage the trust’s financial and legal matters. In such cases, trustees may need professional assistance, which can be costly and time-consuming.
  • Honest person: Honesty is an essential trait for a trustee, as your trustee will manage your entire estate. They should act with integrity and transparency in all matters related to the trust.
  • Financially stable: Another important point to consider is financial stability. It’s unnecessary, but it can provide additional security to the assets. A financially stable trustee isn’t likely to mismanage the trust finances for their personal interest.

Final Thoughts

So yes, a trustee can also be the beneficiary (as long as there’s no sole beneficiary or sole trustee) of the trust, although it’s not generally advised. This decision can lead to legal battles among beneficiaries in the future.

Moreover, there’s a risk that the trustee you choose may prioritize their own interests as a beneficiary, leading to conflicts of interest. So make your decision carefully! If you need more assistance, don’t hesitate to contact our trust attorney for guidance

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Dustin MacFarlane’s primary focus is on Elder Law and protecting families and seniors. He is a Certified Specialist in Estate Planning, Trust, and Probate Law by the State Bar of California Board of Specialization — a rare distinction.

Prior to becoming an attorney, Mr. MacFarlane worked in the Long Term Care industry. After becoming licensed to practice law in January of 2009, Elder Law quickly became his focus. Seeing the need during his former career, Mr. MacFarlane pursued Elder Law as a primary area of practice.

By Dustin MacFarlane

Dustin MacFarlane’s primary focus is on Elder Law and protecting families and seniors. He is a Certified Specialist in Estate Planning, Trust, and Probate Law by the State Bar of California Board of Specialization — a rare distinction.

Prior to becoming an attorney, Mr. MacFarlane worked in the Long Term Care industry. After becoming licensed to practice law in January of 2009, Elder Law quickly became his focus. Seeing the need during his former career, Mr. MacFarlane pursued Elder Law as a primary area of practice.