If you are the beneficiary of a trust in California, it’s essential to understand that you are afforded specific rights by law. Significantly, a trust beneficiary should not simply sit back and wait for the administration process to take its course — there are many things that can happen between the grantor’s passing and the time the trust is distributed. A beneficiary must take any legal measures necessary to enforce their rights during the administration process to ensure they receive the inheritance that was meant for them.
If you are the beneficiary of an irrevocable trust, you should be aware that you have the following rights:
The trustee must provide you with a true and complete copy of the trust if requested. You are also entitled to a copy of written amendments to the trust, as well as any written instructions provided to the trustee that could impact how the assets are distributed. In addition, you have the right to see bank statements, receipts, invoices, and any other information relevant to the trust.
Trust beneficiaries have the right to be kept reasonably informed about the details of the trust and its administration without specifically requesting this information from the trustee. This can include information about the trust assets, liabilities, disbursements — and any actions taken by the trustee. If you believe that the trustee is not providing you with the information you need about the trust, you can make a written demand for a report.
Under California Probate Code, a trustee must provide an accounting at least annually to a current income or principal beneficiary of the trust, when the trust is terminated, and upon the request of a beneficiary. While there is no requirement that a remainder beneficiary be provided with an accounting, the court has the discretion to order the trustee to account to them. Additionally, the court can require that a trustee provides an accounting once the remainder beneficiaries become current beneficiaries.
As a trust beneficiary, you have the right to object to the trustee’s accounting within three years of receipt of the accounting. If an objection is filed, the trustee has the cumbersome task of proving that the accounting is accurate. However, once the trustee obtains court approval for the accounting, it can no longer be challenged.
If a trust has more than one beneficiary, the trustee must treat each of them impartially. They must also act impartially when it comes to investing and managing the trust assets, while considering the differing interests of the beneficiaries. The trustee must also balance the interests of income beneficiaries and remainder beneficiaries.
In many cases, it can take 12-18 months before trust administration ends and the property is transferred to beneficiaries. However, it can take longer if the trust is particularly complex. Unless the trust instrument provides a valid reason for delaying distribution of the assets, a trustee is required to make timely distributions.
In the event the trustee is not performing their duties, or has engaged in wrongful conduct, you can ask the court to replace them. The trustee is required to administer the trust in accordance with the terms of the instrument, keep personal funds separate, and must invest the trust assets prudently. They are also prohibited from taking part in self-dealing or showing favoritism to one trust beneficiary over another. Importantly, the trustee has a fiduciary duty to act in the best interests of the trust beneficiaries and can be held liable for failing to do so.
If you’re the beneficiary of a trust, you may have the right to take legal action against the trustee if their actions were improper, they refused to account, or breached their fiduciary duty in some way. If you have a valid claim to trust property that was mismanaged or embezzled, you may be able to pursue a claim against the trustee to recover the asset.
In some cases, litigation might not need to be commenced against the trustee, but rather the trust instrument itself. For instance, if you believe the trust or an amendment to the trust should be invalidated due to fraud, undue influence, or the grantor’s incapacity, you may have a legitimate reason to bring a legal claim. However, simply being unhappy with the inheritance you were left is not sufficient to contest the trust instrument.
If you’re a trust beneficiary and have questions about your legal rights and how to enforce them, a skilled trusts and estates attorney can help ensure your interests are protected. With over 20 years of experience, the Law Offices of Rick D. Banks provides reliable representation to clients throughout Fresno and the surrounding area for a wide variety of estate planning and trust litigation matters. To schedule a no obligation consultation, call (559)222-4891.