October 28th, 2022 in Trusts
10 things California trust beneficiaries must know. If you are a trust beneficiary in California, you are the only person who can protect your rights under the trust. Here are 10 things you must know to protect your rights as the beneficiary.
Know Your Trust
Read your trust as many times as you need to thoroughly understand it. If you do not understand the trust, consult with an attorney. The trust is what determines your rights and what you are entitled to receive.
Know What You Are Entitled To
Understand what you are entitled to and when you are to receive your distribution. Not all beneficial interests are the same. Are you entitled to income, principle or both? Are you the beneficiary of a specific gift or a residual beneficiary?
Ask for Information in Writing
As a beneficiary you are entitled to information regarding the trust assets and the status of the trust administration from the trustee. You are entitled to bank statements, receipts, invoices and any other information related to the trust. Be sure to ask for information in writing. It does not have to be sent via certified mail but it should be in writing such as a letter or email. Be sure to keep a copy for your file of each and every request and any responses you receive.
Request an Accounting
Not all beneficiaries are entitled to an accounting. The income and principle beneficiaries are entitled to an accounting. If you are entitled to an accounting, ask for an accounting from the trustee after 6 months. The request should be in writing.
Know Your Tax Consequences
If you have questions about the tax consequences of your inheritance, seek the advice of a professional.
The Trust Is Being Administered On Your Behalf
You may feel as a beneficiary you have no rights. The trustee is in charge and as a beneficiary you have no control. This is a common misconception. The trustee is administering the trust on your behalf. If you disagree with anything the trustee does or does not do, they must ultimately to you and the trustee cannot treat you with hostility. As a beneficiary you can hold the trustee responsible for any damages the trustee causes to the trust. The trustee ultimately answers to you.
You Can Question the Trustee
Some trustees believe the beneficiary should not question their actions or ask for the status of a trust administration. This is absolutely not true. You are entitled to be kept abreast of the status of the trust administration as well as ask the trustee questions. The trustee has a duty to respond within a reasonable amount of time. If you are dealing with a trustee who is not cooperating with you or providing you with any information, it may be time to seek legal representation.
You Can Remove the Trustee
If the trustee is not properly performing his duties, you can request the court remove the trustee. This is not a trust contest as you are not contesting the trust document. You are merely contesting the actions of the trustee. As a beneficiary, you are entitled to a trustee who performs his or her duties in a reasonable amount of time, protects the trust assets for your benefit and treats you with respect. The trustee is required to put your interests and the trusts before the trustee’s interest.
You Are Entitled to Review the Trust Records
As a beneficiary, you are entitled to review the trust’s records including bank statements, the checking account ledger, receipts, invoices, etc. Before the trust administration is complete, it is recommended you request and review the trust’s records which support the accounting. If you have any questions about any of the documents, you are entitled to receive answers.
You Have A Right to End the Trust Administration
If the trustee is taking too long to do administer the trust, as a beneficiary you can petition the court for the trustee to send the final accounting and to end the trust administration. The trust administration should take some time but a simple trust administration should not go on for years and years.
Given the legal nature of the information you've shared regarding trust law in California, let's dive into the concepts and details referenced in that article. As someone well-versed in trust law, I'll explain these key points:
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Know Your Trust: Understanding the trust document is fundamental. It delineates your rights, entitlements, and the specifics of what you're due as a beneficiary. This means comprehensively reading and grasping the content. If it's convoluted, consulting with a legal professional is crucial.
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Understanding Entitlement: Not all beneficiaries share the same entitlements. Your portion might involve income, principal, or specific gifts. Your position as either a residual or specific beneficiary shapes what you're entitled to.
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Request Information in Writing: As a beneficiary, you possess the right to inquire about trust assets and administration status. It's recommended to solicit this information in writing—emails or formal letters—to maintain a documented record.
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Seek an Accounting: Income and principal beneficiaries have the right to request an accounting after a reasonable duration, typically six months. This gives a comprehensive overview of trust activities.
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Tax Implications: Inheriting from a trust might have tax implications. Seeking counsel from a tax professional is advisable to comprehend these consequences.
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Trustee's Role: A common misconception is that beneficiaries lack control. However, the trustee administers the trust on your behalf. Disagreements or damages caused by the trustee can render them liable.
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Question the Trustee: Beneficiaries have the right to inquire about trust status and actions. Trustees are obliged to respond reasonably.
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Removing the Trustee: If the trustee fails in their duties, beneficiaries can petition the court for their removal. This isn't contesting the trust document but contesting the trustee's actions.
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Review Trust Records: Beneficiaries can access trust records to review financial transactions and other relevant documentation. This ensures transparency and helps understand the trustee's actions.
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Ending Trust Administration: If the trustee unnecessarily prolongs the administration without reasonable cause, beneficiaries can request the court to conclude the process. Trust administration should be timely and efficient.
These points encapsulate the rights, responsibilities, and avenues for recourse that trust beneficiaries in California possess. Understanding these facets is crucial for safeguarding one's interests in a trust.
