The relationship between a trustee and beneficiary can be personally and legally complex, especially when a beneficiary disagrees with how the trustee is administering the trust. In these situations, it is normal for both the beneficiary and trustee to wonder what their rights are to protect the integrity of the trust from disgruntled or, worse, ill-intentioned parties. When determining who has more rights, a trustee or the beneficiary, a trustee generally has significantly more legal authority over a trust than a beneficiary, but a beneficiary still has certain rights they can enforce to protect themselves from trustees who abuse this power.
Who Has More Rights: a Trustee or the Beneficiary?
Explaining who has more rights between a trustee and the beneficiary requires comparing the rights of both with some nuance. Below, we’ll explore the rights of both, when they can override one another, and when it is important to work with an attorney.
Related Article: Can a Beneficiary Force a Trustee to Sell Property?
What Are A Trust Beneficiary’s Rights?
A trust beneficiary has several rights that protect them and their inheritance. If a trustee violates these rights, it could warrant litigation to hold the trustee accountable.
Trust beneficiary rights include:
- The right to receive information about the trust and its management.
- The right to an accounting of the trust’s assets, liabilities, receipts, and disbursements.
- The right to file objections to accounting.
- The right to see financial statements.
- The right to enforce the terms of the trust.
- The right to petition the court to have the trustee suspended, removed, or replaced.
- The right to request court intervention if the trustee is not acting in the best interest of the beneficiaries.
- The right to sue the trustee for a breach of fiduciary duty.
- The right to receive their share of the trust distribution, as stated in the trust document.
In California, a beneficiary can sue a trustee for breaching their fiduciary duty, which could mean withholding information, misappropriation of trust assets, improper investments, or delayed distribution.
In order to hold a trustee accountable for failing to fulfill their trustee duties, beneficiaries must have valid grounds to do so, prove that a breach occurred, and adhere to strict deadlines. Because of this, working with a trust litigation lawyer is essential to enforce your rights, hold a trustee accountable, and reverse the damage they might have caused to the trust.
“As a beneficiary, it can feel like you are powerless and at the mercy of a trustee and their decisions. But it’s important to understand you have rights. A trust litigation lawyer can help you enforce them to defend your inheritance and hold a trustee accountable.”
– Nicholas D. Porrazzo, Partner, Gokal Law Group
Related Article: An Expert Guide to the Rights of Trust Beneficiaries
What Are Trustee Rights?
A trustee has the most discretion and control over the administration of the trust. A trustee has the authority to manage and distribute trust assets as outlined in the trust documents, which could include making investments, paying bills, and making distributions to beneficiaries.
The trust document may also clearly outline the trustee’s duties, rights, and obligations. Regardless of the terms of the trust document, however, a trustee must fulfill their fiduciary duty to always act in the best interests of the trust and beneficiaries. Trustee rights – subject to specific terms of the trust document – generally include:
- The right to represent the trust for legal purposes.
- The right to manage the affairs and expenses of the trust and its assets.
- The right to collect, hold, retain, and add to trust property.
- The right to pay outstanding debts to creditors on behalf of the trust.
- The right to contact government institutions, such as the IRS.
- The right to issue notifications on behalf of the trust.
- The right to invest the trust assets.
- The right to borrow money from the trust for any trust purposes, repaid from trust property.
- The right to “reasonable” trustee fees.
- The right to hire professionals using trust assets to help them perform administrative duties.
- The right to pursue or defend litigation on behalf of the trust.
Related Article: Is a Trustee Not Communicating with Beneficiaries? Here’s What to Do
Can a Beneficiary Override a Trustee?
Determining who has more rights, a trustee or the beneficiary requires understanding when a beneficiary can override the actions and decisions of a trustee. Unfortunately, a beneficiary can override a trustee’s decisions and actions only through trust litigation and filing a petition in court.
If a trustee remains transparent throughout the administration of the trust, adheres to the terms, obligations, and duties outlined by the trust document, and upholds their legal fiduciary duty, then there may not be grounds for a beneficiary to override the trustee’s actions. If a beneficiary disagrees with the terms of the trust that dictate the trustee’s actions, the beneficiary can contest the validity of the trust, although doing so can have consequences for a beneficiary. It is always important to speak to a trust litigation attorney before taking any action against a trustee or a trust.
Related Article: Can a Beneficiary Stop the Sale of a Property in California?
Can a Trustee Override a Beneficiary?
In most cases, a trustee can override a request from a beneficiary without seeking court intervention.
If a beneficiary requests something that is not permitted under the law or the terms of the trust, the trustee can simply refuse to fulfill that request. For example, if a beneficiary disagrees with the distribution schedule in a trust document or the trustee’s selling trust property, the trustee may disregard the beneficiary’s wishes and fulfill the trust’s written requirements and their fiduciary duty.
However, if the terms or language of the trust are ambiguous or subject to multiple interpretations, the trustee may be obligated to file a petition with the court and request instructions from the court with respect to their obligations under the terms of the trust. The trustee must also act neutrally in administering the trust and may not favor one beneficiary over another.
Related Article: What if a Trustee Refuses to Distribute Assets?
Do You Need Help Enforcing Your Rights? Schedule a Consultation.
Understanding who has more rights, a trustee or the beneficiary, depends on your situation. Generally, a trustee holds the power to administer the trust and make decisions in the best interest of the trust and all beneficiaries, but beneficiaries have the right to hold trustees accountable for abuses of power or breaches of their fiduciary duties. If you are in a situation where it feels like a trustee or beneficiary is encroaching on your rights, it is imperative to work with a trust litigation attorney as soon as possible. Contact us today to schedule a consultation.
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