Trusts are legal entities that will assume ownership of or own some assets after a specific triggering event. However, who has the right to be a trustee or beneficiary where a Trust has four elements Trustee, trust property, trust documents, and known or real beneficiaries? The trust documents involve information on how assets in the Trust should be handled and distributed.
A person or institution is responsible for the Management and distribution of the assets as per the instructions in the Trust.
This person or entity receives the assets or properties mentioned in the will or Trust.
Who has the right to be a Trustee or the Beneficiary, as per the estate planning lawyer?
As per the estate planning lawyer, first, we should look at the different rights the Trustee and the beneficiary have and how they can lose these if they act untimely and incorrectly.
Right of a trustee
The rights of a trustee, in simple terms, break down to the fiduciary duties they have, which include distributing the trust assets.
The Trustee is responsible for keeping the Irrevocable Trust out of any legal issues. If any trust beneficiary sues the Trust with the help of a trust litigation lawyer, the Trustee is compelled to act. A Trustee has to make sure he maintains transparency and has no undue influence. Therefore, his responsibilities include being transparent, keeping beneficiaries and heirs reasonably up-to-date with everything, and knowing and understanding the consequences of his actions.
The Trustee of an estate has some built-in rights provided by the courts to ensure.
The Trustee is responsible for any litigation faced by the Trust and thus has the right to represent the Trust for legal reasons. The Trustee can hire an estate lawyer, he can petition courts, and attend any court proceedings if necessary.
Trust is responsible for managing the affairs and expenses of the deceased estate and thus retains the right to do so. Accordingly, the Trustee can receive payments for any maintenance works, manage debts and expenses, collect receivables and appraisals, and for an assortment of administrative duties of the Trust.
The Trustee can contact government institutions. Trustees can obtain any information about the estate, such as an Employee Identification Number from the Government institutions like IRS.
The Trustee can issue notifications on behalf of the Trust as he holds the right to do so; the Trustee can create public notices and prepare any records, statements, and tax returns related to the estate.
The Trustee retains the right to invest in Trust assets. The Trustees need to ensure assets are preserved and productive for current and future beneficiaries and do this without hoping for any personal benefit.
For legal reasons, a trustee is considered the owner of all the assets of the Trust and has to protect them. Therefore, if a trust beneficiary is trying to occupy a trust property, then the Trustee has to stop that and protect the assets.
Rights of a Beneficiary
The state laws and the terms of the Trust determine the rights of beneficiaries of a trust.
These trust beneficiary rights include:
1. Right to Information
- A trust beneficiary has the right to obtain certain information about the Trust.
- A beneficiary has the right to notice who the trustee is. They keep an eye on whenever a trustee has changed and how to contact them.
- A beneficiary can get a copy of the documents related to the Trust and other legal documents associated with the Trust.
- A beneficiary can get a list or an inventory of all the assets within the Trust and information about their values.
- He or she can have any notices regarding court filings.
- A beneficiary has the right to information about any updates regarding asset distribution.
- Periodic accounting of a Trust
- A beneficiary holds the right to get the Trust’s accounting information. He or she can ask for an accounting of the estate, and if they find any irregularities, then they can challenge this in court or can resolve the issue with the Trustee.
2. Right to timely distribution of assets.
If a beneficiary has a need or some justification with proper backup information, then he or she can provide the Trustee with this information and request the distribution of assets. Usually, these distributions of assets take place according to the wishes and instructions written in the trust documents.
3. Right to be treated equally
In the case of multiple beneficiaries of a single trust. Each beneficiary holds the right to treat impartially by the Trustee. The Trustee will ensure that they uphold the right of each beneficiary and does not dictate the terms of asset distribution.
4. Right to have an Independent Legal Advisor
- The lawyer who will assist with the estate plan is the lawyer who represents only the Trust and Trustee.
- If the beneficiary has issues with the Trustee or the lawyer, he can appoint a legal Advisor.
- This legal advisor will use it if the beneficiary wants to challenge specific actions of the Trustee.
- If he or she wants the removal of the Trustee.
- If the Trustee is misusing and mismanaging the funds and assets of the Trust.
- Any interpretation or modification of the terms of the Trust.
- Both Trustees and Beneficiaries have different rights in the case of a Trust.
- Both need to ensure they act with transparency and in a fair way. Else the other party can challenge them, which leads to a contesting of the Trust.
- Usually, a Trustee has more rights and duties when a trust has formed. But if he fails his fiduciary duty or is not fair and transparent. Then the beneficiaries can override a trustee using legal means.
In this article, you will learn about various rights and responsibilities that a trustee and beneficiaries of the Trust have.