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Chris Jones: Trust Beneficiaries’ Bill of Rights

One of the advantages of trusts is privacy. Unlike the probate of a will, there is no legal requirement that the trustee file the trust with the local court.

Privacy is also one of the disadvantages of trusts, however. Unless the trustee provides information about the trust and trust assets to the trust beneficiaries, the beneficiaries will have no idea whether they have received all that they are entitled to, or whether the trustee has properly done his or her job.

As a trust beneficiary, you have the right to know! This article is intended to inform you, the trust beneficiaries, of your legal rights.

1. You are entitled to a true and complete copy of the terms of the trust as of its creator’s death.

This includes a complete copy of the written trust document, all written amendments signed at a later date and any “written instructions” to the trustee that affect disposition of the trust assets. Since one of the most common trust disputes arises from the interpretation of the trust, it is especially important for you to get a copy of the trust, and have it reviewed by your counsel. You don’t have to agree with how the trustee interprets the trust.

All trustees have a legal duty to keep you reasonably informed about what the trust provides, and what they are doing to administer the trust. You have the right to sue them if they don’t.

If the trustee refuses to give you the terms of the trust after you have made written demand, the court has the power to remove the trustee and/or hold them personally liable for your damages.

2. You are entitled to the trustee’s written report of the administration of the trust when you make a reasonable request.

This includes the trustee’s report of information about all of the trust’s assets and liabilities, receipts and disbursements, and the actions of the trustee. If you feel that you are being left in the dark, you should make a written demand for such a report.

3. You are entitled to an accounting from the trustee.

This includes their written statement of receipts and disbursements, a statement of assets and liabilities, the trustee’s compensation, the names of the agents hired by the trustee, their relationship to the trustee and their compensation. The trustee’s failure to provide any of this information may also result in their being removed and/or held liable for damages.

If you do not agree with the account or the trustee’s actions, you have the right to petition the court to obtain a review of the account and the acts of the trustee. Beneficiaries are entitled to ask the trustee questions about the accounting, and are not obligated to accept the accounting without proper backup.

4. You are entitled to have the trustee administer the trust according to the terms of the trust document, taking reasonable steps to secure trust property and make it productive, and using the same standard of care, skill and caution that a prudent person in like circumstances would undertake.

This means that if the trust document says so, the trustee must distribute trust assets as soon as reasonably possible. It also means that the trustee must act carefully, at the risk of being held personally liable for his or her failure to do so. This is also an area that is the subject of disputes about proper interpretation of the trust’s instructions to the trustee.

5. You are entitled to be treated fairly and impartially.

Every trustee has a duty to administer the trust solely in the interests of the beneficiaries. The trustee may not use or deal with trust property for his or her own profit, or take part in any transaction in which the trustee has an interest adverse to you. In other words, the trustee may not favor himself or herself at your expense.

A trustee also has a duty to treat you and all beneficiaries impartially, not favoring one beneficiary over the other. The trustee must invest and manage the trust property in a way that takes into account any differing interests of the beneficiaries. In other words, the trustee may not favor any other beneficiaries at your expense.

You have rights, but it is up to you to protect and enforce them. Because the court does not have continuing jurisdiction over trusts, you must bring any unfairness to its attention. If you do not act promptly, you will lose those rights.

If you have concerns about whether you are receiving all of your benefits, get legal advice immediately. After all, they are your rights.

Chris Jones is an attorney at Rogers, Sheffield & Campbell LLP, a Santa Barbara law firm. Click here to read previous columns. The opinions expressed are his own. This article is not intended to provide legal advice. For legal advice on any of the information in this post, click here for the form or phone number on the Rogers, Sheffield & Campbell Contact Us page.

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