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Rights of a Beneficiary

With smaller estates, it is usually sufficient to rely on a will to ensure a loved one's property is distributed according to his or her wishes. When dealing with assets around $150,000 or more, however, it will typically be best to establish a trust and designate a trustee to manage your estate property. In this case, beneficiaries may feel as if "all the power" is in the trustee's hands. They may feel they are powerless to correct any potential abuse of that power or even to keep themselves informed on the situation. This is simply not the case. Beneficiaries have many rights as well.

What are the rights of a beneficiary? The answer to that question varies with the type of trust-agreement and the type of beneficiary involved. Trusts that are "revocable" can be changed in practically any way by the trustor while he or she is still living. Once the trustor passes away, however, most trusts become "irrevocable," and cannot be changed except under specific circumstances and by court order.

Beneficiaries of irrevocable trusts typically have the following rights:

  • To request an account of how the trustee has managed the property. The request should be made in writing, and an annual account is normally mandatory.
  • To receive all relevant information on how the trust-agreement is set up and on how the assets are supposed to be distributed among the beneficiaries.
  • To have trustees removed and replaced if they are not fulfilling their duties and managing the estate in accordance with the trustor's last wishes.
  • To end the trust. This takes unanimity among beneficiaries and a court that agrees the trust's purposes are all fulfilled or no longer capable of being fulfilled.

Finally, note that "current" beneficiaries, who are entitled to presently receive income from the trust-property, take priority over "contingent" beneficiaries. The latter are entitled to the property remaining after all assets designated to the current beneficiaries are paid. To learn more about beneficiary rights, feel free to contact Mortensen and Reinheimer, PC, by calling 714-384-6053 or by filling out their online contact form.