Trusts and Wills clearly spell out the rights of beneficiaries and responsibilities of legal guardians or executors of estates. As a beneficiary, it is important to thoroughly understand and be aware of the rights you have been afforded during the estate planning process. In this blog, we’ll dive into the five most important rights you should know as a beneficiary of a Trust.
What are beneficiaries?
A Trust beneficiary is the individual or the group of people for whom the Trust is created. A Trustee may be established to manage Trust assets on your behalf. Other times, you as a beneficiary may be entitled to ensure that the Trust is properly managed, among other rights that may not be obvious at first glance.
Before we begin, take a look at our estate planning tips to help get you started and be sure to become familiar with the terms used in Wills and Trusts so that you don’t face confusion as you read on.
Copy of the Trust
Do beneficiaries get a copy of the Trust?
Yes they do. Current and remainder beneficiaries have a right to a copy of the Trust document to put them in possession of enough information about the Trust and its administration so that they can enforce their own rights. Remember, the cost of setting up a Trust can be expensive, so make sure you ask for your copy. It can be worth its weight in gold by helping you realize where you stand and what you’re entitled to.
Information you may locate in a Trust document usually includes:
- Assets held in the Trustee’s name
- Contact information for specific parties named in the Trust
- Real estate asset information
- Bank account information
- Information about any heirlooms that exist
Right to distributions
As a beneficiary of a Trust, it is important you familiarize yourself with how distributions from your Trust work and how to claim the inheritance that you are entitled to. As a beneficiary, you are entitled to the timely distribution of payments from the Trust as outlined in the Trust document itself. Along with the right to timely distributions from the Trust, it is important to become aware of tax consequences that arise from any payments you receive from the Trust itself.
Right to information
When you ask yourself does a beneficiary have a right to see the Trust, the answer is a resounding yes. Beneficiaries of Trusts, depending on your state and its laws, are entitled to information about the Trust – more specifically, what you are entitled to and a copy of the Trust document itself.
You should take the time to read through the Trust document as many times as necessary to familiarize yourself with the details that relate to your distributions and role as a beneficiary of the Trust itself. There can be a huge difference when one discusses an irrevocable Trust vs Will so be sure to become familiar with both types of legal documents and what they contain.
Right to accounting
Does an executor have to show accounting to beneficiaries?
Current beneficiaries are entitled to an accounting of the Trust. An accounting is a detailed report of any income, distributions, liabilities, and expenses the Trust has seen within a specific period. Typically, Trustees are required to provide an accounting annually, but this report may also be requested by current beneficiaries.
As a beneficiary, you have the right to a reasonable report of the following as they relate to the Trust:
- Assets
- Liabilities
- Income
- Bank statements
- Receipts and disbursements on the Trust property
Removal of Trustee
Current beneficiaries also have the right to petition the court to remove the Trustee if they believe the Trustee isn’t acting in their best interest. Trustees have the obligation to balance the needs of current beneficiaries with remainder beneficiaries. Tempers often flare up, especially in conservatorships or situations where a child is under the care of a guardian and opinions conflict as to a specific distribution schedule or the ownership of a specific asset held in a Trust.
FAQ for Trust beneficiaries
Who has more rights, a Trustee or a beneficiary?
A Trustee’s authority generally cannot be overruled. If a beneficiary simply does not like how a Trustee is managing their assets, that isn’t a good enough reason to legally fight the Trustee’s rights. In rare cases, if the Trustee is clearly breaching their duty or failing to uphold the Trust agreement, this is cause for the beneficiary to override the Trustee.
Can a Trustee remove a beneficiary from a Trust?
Only the person who granted the Trust is able to decide who will be a beneficiary of their Trust. After the grantor has passed away, the Trust is irrevocable. That means that the Trustee generally cannot change or remove the beneficiary from a Trust.
Can an executor withhold money from a beneficiary?
The grantor of the Trust gets to decide how much money a beneficiary receives, as well as when and how the money will be allocated. Unless the grantor has expressly said that the Trustee can change the terms of the Trust, the Trustee must manage finances according to the Trust.
How long after a person dies will beneficiaries be notified?
If the deceased has a Trust in place, beneficiaries should be officially notified within 60 days of the grantor’s passing. Beneficiaries can expect to hear the news directly from the Trustee appointed by the grantor.
Let LegalShield help set up your Living Trust
Now that you’re more familiar with what rights you have as a beneficiary of a Trust, we can help you set up a Living Trust.
If you’re still on the fence about creating a Will or Trust, check out this Fortune Magazine article in which LegalShield was prominently featured. Those without a Will or Trust are twice as likely to feel stressed and afraid as those with them. So let there be no doubt: a Will or Trust is in your best interest and your family’s best interest.
See also: What You Need to Know About Estate Taxes
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