Trustees and beneficiaries should have a symbiotic relationship. However, when a trustee is either neglecting or abusing their station, beneficiaries often feel at the mercy of the trustee. Trust beneficiary rights offer essential protection under these circumstances. While laws, trust terms, and the trust type dictate many rights, some rights are non-negotiable.
Defending and advocating for your rights is only possible if you understand the rights of trust beneficiaries and work with a premier attorney. Here are beneficiary rights:
A Guide to the Rights of Trust Beneficiaries
A Copy of the Trust Document
When assessing the rights of trust beneficiaries in your situation, obtaining a complete, final copy of the document is essential.
Beneficiaries have a right to a copy of this document, and we advise keeping a copy for future reference. This document contains written instructions that impact beneficiary rights and distribution, and it often includes:
- Assets held in the trust
- Contact information for named parties
- Real estate information
- Bank account details
- Information about heirlooms
Trust beneficiary rights include a right to receive timely distributions outlined in the instrument. Reviewing the distribution clauses in the document is essential to fully understand distributions. For example, are you entitled to income, principle, or both?
When considering the rights of trust beneficiaries, information is key.
Beneficiaries are entitled to information about the trust and its administration, including:
- Bank statements
- Trustee compensation
- And more
Trustees should also communicate regularly with the beneficiaries. Typically, this information determines how beneficiaries enforce their rights.
Trust accounting is an essential component of trust administration, and trust beneficiary rights include entitlement to periodic accounting.
An accounting is a detailed report of all income, expenses, and distributions from a trust. Usually, a trustee must provide an accounting annually, but trust terms can alter that. In some situations, beneficiaries can also waive this accounting.
Just as importantly, beneficiaries also reserve the right to challenge an accounting, pursue judicial review, or demand one in writing if they feel it is necessary.
Removing the Trustee
Ultimately, the rights of trust beneficiaries should offer protection, which the right to remove a trustee exemplifies. To remove a trustee, beneficiaries must petition and prove they are willfully neglecting their duty or unable to perform it.
Grounds to petition for removal include situations that involve:
- The misuse or misappropriation of assets or funds
- Negligence that resulted in financial harm to the trust
- Withholding a due distribution without providing valid reasons
Trustees can either leverage the courts to compel a trustee to fulfill their duty or remove them entirely. Beneficiaries can also petition to have a trustee suspended, surcharged, or even changed under some circumstances.
Terminating the Trust
Depending on the situation, trust beneficiary rights may include the ability to petition to end the trust if its purpose has been fulfilled or fulfillment is impossible.
If all beneficiaries are over 18 years old, they can unanimously decide to terminate a trust to receive distributions, regardless of whether or not a trustee agrees.
Generally speaking, a trustee is a fiduciary and should always act in the best interest of, and consider, beneficiaries’ best interests and avoid self-dealing and conflicts of interest.
One of the most important rights of trust beneficiaries includes ensuring impartiality and a duty of loyalty to the trust. A trustee has a legally binding obligation to administer the trust irrespective of their interests and make the trust property productive.
Challenging the Trust & Trustee
Lastly, trust beneficiary rights include the right to demand an explanation. For example, even if a trust document may stipulate that a trustee does not need to inform beneficiaries before selling property, they still must provide accurate information on these sales.
Contact a Premier Attorney to Enforce Trust Beneficiary Rights
As a beneficiary, a trustee should work with you and cater to your needs. In instances when a trustee fails to prioritize beneficiary interests and trust interests, understanding the rights of trust beneficiaries is integral to enforcing them. Sometimes, a trustee puts their interests before a beneficiary, and other times, trustees can fail to maintain transparency throughout the administration. Alternatively, trustees can also prove incapable of fulfilling their fiduciary duty. Regardless, beneficiaries have rights that protect them.