The law provides trust beneficiaries with certain privileges towards protecting their rights so that they can keep in touch with the trustee and the trust.
Although the rights may differ among different types of trusts, the basic rights available to any beneficiary are:
Entitlement to Obtain Annual Trust Reports
A trust report consists of data which is highly important to the recipient; for example, total income produced by the trust, and commissions and expenses paid out. Generally, trust reports have to be sent every year to the beneficiary, but if the trustee neglects to provide the report or declines to provide one, the beneficiary can claim a copy of the trust report from the court.
The Right to Obtain an Accounting of the Proceedings
A trustee is obligated to properly choose how the investment of the trust’s assets will be made. Typically, a trust contains both a property (land) and cash. In investing these assets, the trustee has to be very diligent and exercise great discretion. The law also requires trustee to act in the best interests of the beneficiary, and requires that trustees should diversify their investments, so that all of the assets are not placed in a single category, because it can put them in danger and may also limit returns.
In case the recipient has some concerns or questions about the trustee’s choices and decisions, it is their right to ask for bookkeeping or accounts of the investments. The furnished accounting report should detail every activity and all the increases and losses on the principal.
Requesting a New Trustee
If the beneficiary feels that the trustee is being troublesome, uncooperative, or is declining to carry out the job properly, the beneficiary may request for a different trustee. But this is only achievable through the court’s decision.
If the purpose behind the request is huge losses of the principal amount, the trustee will have to reimburse the entire trust amount as well.
Suing the Trustee
As a trust beneficiary, you also have the right to sue the trustee if they have not acted in your best interest. After suing, the trustee may be held responsible for incurring loss on the trust assets and for the income that would have been generated otherwise.
The trustee has an obligation to handle the trust with caution and due care, and should be faithful and fair to the trust beneficiaries. Investing poorly, generating a personal profit from the trust, and committing fraud are some of the things that a trustee can be held liable for.
Terminating the Trust:
If there is no minor among the beneficiaries of the trust, the trust can be terminated, but only after the court confirms that the intent of the trust creator has already been met or cannot possibly be met.
All the trust recipients must concur, including all those beneficiaries as well, who are qualified for any remainder from the trust. As seen in past cases, termination of some trusts becomes difficult, for example, a spendthrift trust where the settler undoubtedly expected that the trust will be withheld and not allotted to the beneficiaries.
Consult with an Orange County financial advisor if you are considering putting your assets in a trust or have been named a beneficiary. Griffin Financial can answer all your questions and ensure you are making the right legal and financial decisions. Call Griffin Financial at (714) 912-4764 today!