Is a trustee free to do whatever they want? For instance, can trustees make changes to a trust? I was recently asked these questions by a family member and I think it is worth explaining as many people are probably wondering the same thing.
First, whether or not changes can be made to a trust depends on whether or not the trust is revocable. Some trusts are irrevocable when they are created; an example is an Irrevocable Life Insurance Trust. A trustor (also known as a grantor or settlor) is the person who sets up a trust. Often, trustor(s) act as trustees of their own trust during their lifetime. On the other hand, if the trust is revocable, then the trustor can make any changes they want to their trust during their lifetime, and can even revoke it entirely. If the trustor is not acting as trustee of their own trust they may have to notify the trustee of any changes they make (depending on the terms of the original trust), but only the trustor has the power to change the terms of the trust.
Once the trustor either passes away or becomes incapacitated, whoever is designated as the successor trustee(s) would step in to administer the trust. It is the trustee’s duty to administer the trust according to its terms. Also, once the trustor(s) passes away, the trust becomes irrevocable, thus no further changes can be made to the trust except in rare circumstances and only by court order. So the answer is no–trustees’ powers are limited by the express terms of the trust and only the trustor(s) who created the trust has the power to make changes.