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5 Rights That Trust Beneficiaries Have

December 15, 2018 by Greg Port, J.D., M.B.A.


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As a trust beneficiary, you may feel like you are at the mercy of the trustee, but depending on the type of trust, trust beneficiaries may have rights to ensure the trust is properly managed.

What is a Trust?

A trust is a legal arrangement through which one person, called a "settlor" or "grantor," gives assets to another person (or an institution, such as a bank or law firm), called a "trustee."

The trustee holds legal title to the assets for another person, called a "beneficiary." The rights of a trust beneficiary depend on the type of trust and the type of beneficiary.

Revocable Trusts

If the trust is a revocable trust—meaning the person who set up the trust can change it or revoke it at any time--the trust beneficiaries other than the settlor have very few rights. Because the settlor can change the trust at any time, he or she can also change the beneficiaries at any time.

Irrevocable Trusts

Often a trust is revocable until the settlor dies and then it becomes irrevocable. An irrevocable trust is a trust that cannot be changed except in rare cases by court order.

Beneficiaries of an irrevocable trust have rights to information about the trust and to make sure the trustee is acting properly. The scope of those rights depends on the type of beneficiary.

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Benefits for Beneficiaries

Current beneficiaries are beneficiaries who are currently entitled to income from the trust. Remainder or contingent beneficiaries have an interest in the trust after the current beneficiaries' interest is over.

For example, a wife may set up a trust that leaves income to her husband for life (the current beneficiary) and then the remainder of the property to her children (the remainder beneficiaries).

State law and the terms of the trust determine exactly what rights a beneficiary has, but following are five common rights given to beneficiaries of irrevocable trusts:

1. Payment

Current beneficiaries have the right to distributions as set forth in the trust document.

2. Right to information

Current and remainder beneficiaries have the right to be provided enough information about the trust and its administration to know how to enforce their rights.

3. Right to an accounting

Current beneficiaries are entitled to an accounting. An accounting is a detailed report of all income, expenses, and distributions from the trust. Usually trustees are required to provide an accounting annually, but that may vary, depending on the terms of the trust. Beneficiaries may also be able to waive the accounting.

4. Remove the trustee

Current and remainder beneficiaries have the right to petition the court for the removal of the trustee if they believe the trustee isn't acting in their best interest. Trustees have an obligation to balance the needs of the current beneficiary with the needs of the remainder beneficiaries, which can be difficult to manage.

5. End the trust

In some circumstances, if all the current and remainder beneficiaries agree, they can petition the court to end the trust. State laws vary on when this is allowed. Usually, the purpose of the trust must have been fulfilled or be impossible.

As a trust beneficiary, it just makes sense to consult an attorney specializing in trusts to get the answers you need. The professionals at Port Legal have the knowledge and experience to assist you. Click here to set up your free, no-obligation consultation today.

Our consultations are completely free of charge and intended to equip you to make the best decision.

 


Topics: Probate, Wills, Estate Executor

Greg Port, J.D., M.B.A.

Written by Greg Port, J.D., M.B.A.

Port Legal founding attorney, Gregory Port has over 30 years experience. He has provided strategic corporate law representation in Central Ohio to clients since 1990. Gregory Port is a lawyer actively practicing in the areas of probate, estate planning, and real estate. His experience and core values are the cornerstones of Port Legal as a specialized advocate for your interests.