As a beneficiary of someone’s trust, you must know your rights. You need to be kept apprised of the status of the administration and able to ask questions. Working with a probate lawyer is warranted if you believe the trustee has breached their fiduciary duty.
Invalid trusts, questionable accountings, and uncooperative trustees are examples of breaches. Work with a California beneficiary rights lawyer to combat them.
Table of Contents
You Have the Right to See the Trust Document
Unless a beneficiary has waived this right in writing, trustees must disclose information about the trust to beneficiaries. This includes the trustees’ decisions, receipts and disbursements of trust assets, the identity of the trustees and the beneficiaries, and a copy of the trust document itself. This is one of the most important rights that a trust beneficiary has. If the trustee doesn’t comply with this duty, a beneficiary may sue for breach of fiduciary duties.
The trustee must administer the trust solely for the benefit of the beneficiaries, as stated in the irrevocable trust document. However, some trustees disregard this responsibility and only seek to use their position for their gain. This is why it is so vital for beneficiaries to understand their rights regarding trust information.
Beneficiaries have a right to be informed about the trustee’s decision-making process and communicate with the trustee. Additionally, they have a right to an accounting of all the assets the trustee holds and a statement of income and expenses.
In addition to these rights, a beneficiary can also bring what is known as a “trust contest” to change the terms of the trust or even end the trust altogether. This can be done if it is found that the trustee breached their fiduciary duties or that circumstances have changed to make continuing the trust inadvisable.
You Have the Right to Ask Questions
When someone becomes a beneficiary of an estate plan, there are several questions they should ask. Some of these will pertain to the trust grantor’s intentions, and others will focus on how the trust process will work. Beneficiaries should also ensure they understand the role of the trustee and the trust administrator in the distribution requirements of the plan and know their rights as a trust beneficiary.
Depending on state law and the terms of the trust, beneficiaries may have different rights. For example, revocable trusts typically have more limited rights than irrevocable ones. However, all beneficiaries are entitled to be kept informed about the trust business and should receive scheduled distributions. In addition, beneficiaries are entitled to a regular (usually annually) accounting, a detailed income, expenses, and distributions report. This allows the beneficiaries to keep the trustee in check.
Beneficiaries can contact the trustee directly with any questions or concerns. Beneficiaries should ask for information in writing so they have a record of the request. If a trustee is not responding promptly, beneficiaries should seek legal help. Heirs may petition the Court to remove them for good cause if the trustee is not meeting their duties. Good cause can include a breach of fiduciary duty, mismanagement of assets, excessive compensation, or a failure to consider the interests of future beneficiaries.
You Have the Right to Sue the Trustee
Depending on state law, beneficiaries can sue trustees who do not perform their fiduciary duties or cause harm to the trust through misconduct or negligence. Beneficiaries also have the right to sue trustees who engage in questionable financial transactions that violate trust terms. If you suspect a trustee of these things, you must work with an experienced beneficiary rights lawyer who can help fight for your rights.
However, a trustee cannot be sued just for having a personal grudge against them or because they feel the trust they are administering is unfair. To be successfully challenged in Court, the trustee must have committed misconduct, mismanagement, or acted in a conflict of interest. There must also be evidence that the trustee caused harm to the trust. For example, if a trustee has embezzled trust funds or made false statements to beneficiaries.
In addition, if a trustee fails to provide regular accountings or takes excessive fees from the trust, beneficiaries must take action. Although state laws vary, most allow heirs to petition the Court to remove or replace a trustee if it can be proven that they are not performing their fiduciary duties and responsibilities.
You Have the Right to Change the Trustee
In a trust with beneficiaries named co-owners, they may be able to petition the Court for a nonjudicial modification or termination of the trust, assuming everyone agrees to the action. In most cases, the judge will only allow this if it doesn’t frustrate the trust’s purpose or violate a law.
Beneficiaries have the right to ask for a report of all assets, liabilities, receipts, and disbursements that have been made. A trustee must provide this information unless the trust document says they don’t have to.
If the trustee isn’t providing a report within a reasonable amount of time, or if they need to follow the law in some other way, you can work with a beneficiary lawyer to file a request with the Court. This can force the trustee to do their job correctly or pay damages for failing.
As you can see, a trustee’s job is difficult and must do it correctly. Many appointed trustees have no idea what they’re in for, and even professional trustees can be overwhelmed by the workload and responsibilities. Unfortunately, these things can lead to mistakes and breaches of fiduciary duty that can harm a beneficiary or their estate. In these situations, it’s important that the beneficiaries know their rights and take appropriate action to protect what is theirs.