Estate planning clients often ask what their beneficiaries can expect when they pass away and a successor trustee is managing their trust. Clients want to make sure their wishes are followed and that their beneficiaries are treated properly. So, what can trust beneficiaries expect during a trust administration?
It is critically important for the beneficiaries of a Trust to pay attention to the administration and know their rights. The most important duty of a trustee is to communicate with the beneficiaries. The California probate code requires that trustees keep “the beneficiaries of a trust reasonably informed of the trust and its administration.” PC §16060. However, often, trustees feel empowered by the power they hold over the trust administration and do not feel it is necessary to provide information to the beneficiaries.
Beneficiaries should expect to receive a notice from the trustee that he/she is now acting as trustee. In addition, the beneficiary is entitled to a copy of the trust and any amendments under which they are a beneficiary or heir. This puts everyone on the same playing field. Everyone is able to review the terms of the trust to ensure there are no surprises or mistakes.
Most trustees are imbued with a good amount of power, and so they will likely be able to take many actions without the need for beneficiary intervention or oversight. However, if there is specific property, real or personal, that interests a beneficiary, that beneficiary should make those wishes known to the trustee. Having that information will allow the trustee to take it into account when making distributions and collecting assets. It is possible that beneficiaries will receive notices of proposed action if the trustee proposes the sale or other conversion of high-value assets in trust property.
The next main communication from the trustee to the beneficiaries is trust accounting. This document is usually sent to beneficiaries on an annual basis but can be more frequent if defined in the Trust document. The accounting details all of the financial transactions over the accounting period and should show the property as it stands now. This is the most important document to scrutinize.
What happens after the accounting is wholly dependent on the terms of the trust.
It is important to remember that all of these steps are the ideal trust administration overseen by a trust attorney. If the trustee does not hire an attorney to assist in the process, it is possible the trustee will not be fully informed and may not follow the steps. Some common issues with trust administration are not providing an accounting, the trustee using funds to benefit themselves, the trustee commingling assets, and the trustee not following the distribution provisions in the trust.
Some of these issues can be remedied by the court if brought to their attention on time, so if you are a beneficiary of a trust administration and you have suspicions that the trustee is not doing their job correctly, contact Tresp Law, APC and we will set you up for a consultation with an experienced Trust Attorney to review the trustee’s job. Do it before it is too late. Stay informed.
