Your will or trust will not override what is named in the beneficiary designation on a life insurance policy, annuity, or retirement account (like an IRA or 401(k) plan). Trusts can have more than one beneficiary and they commonly do. This is because the settlor, as the owner, can terminate the trust at any time. As discussed in our articles on Trusts and Wills and Fiduciary Duty, the Trustee and Executor owes to the beneficiaries of a Trust or Will a fiduciary duty, the highest duty known to law. The trustee must sue. If a trustee wrongfully disposes of the trust property, the beneficiaries can recover the property unless it has come into the hands of a bona fide purchaser for value. Abused Beneficiary Claims Understanding Abuse in Trust & Wills Beneficiary abuse is not acceptable in California’s trust and will cases. Although it is the presumption that the trustee will act genuinely in accordance with their fiduciary duties, a settlor is always advised to have more than one trustee if they would like a trustee to also be in the nominated class. If the trustee fails to uphold this commitment, the beneficiaries may petition the court to have the trustee replaced. It could be because they feel that they deserve more money over the other beneficiaries. An example of concurrent interests is a group of beneficiaries identified as grandchildren of the settlor, who all receive distributions after their grandparents’ deaths. The beneficiary cannot sue the thief, because the right the trustee has which is protected is the right to possess the car. A beneficiary has the right to receive distributions from the trust that are mandated by the terms of the trust deed, and the trustee may not withhold such distributions.Some trust deeds vest the trustee with discretionary authority, and a beneficiary is generally not entitled to a discretionary distribution. Sometimes the estate trustee takes it upon themselves to make distributions that are not pursuant to the will or intestacy laws. Appointing someone as a trustee on a trust is a big decision. A common theme in an administration of any estate is the breakdown of relationships between family members. Misappropriation of Trust Funds by Trustee. The trustee must also notify the beneficiaries that they have a right to receive a copy of the trust document if they request one. The beneficiaries of a revocable trust have no ownership interest or right to any accounting of the trust assets until after the settlor’s death. Of course, beneficiaries have the right to more than information. 1. Who Should Be … If the trustee misappropriated trust funds, used the trust funds as their piggy bank (self-dealing), sold assets unbeknownst to the beneficiaries (trustee embezzelment), lacked bookkeeping and transparency, then take court action and petition to remove the trustee. Trustees have a fiduciary duty to abide by the terms of the trust and act in beneficiaries best interests. This is a right the beneficiary qua beneficiary does not have. If there is more than one beneficiary, each beneficiary has the right to expect the trustee not to act partially, favoring the interests of one beneficiary over the other(s). including contingent beneficiaries, have the right to request the trustee to provide them with information about the trust’s assets, liabilities, receipts (income) and disbursements (expenses) of the trust, the acts of the trustee and the administration of the trust relevant to the beneficiary’s interest, including a complete copy of the trust. Though not the case in most instances, there are times when a trust’s beneficiary is also named the En español | For most people, a will is the first choice for passing on an estate to heirs.But it's not the only choice. Accessing Trust Terms Depending on the laws of the state in which the trust was written, the beneficiaries may be able to request a copy of the trust document, whereas in other states, they do not have that legal right. That legal right he has solely for the beneficiary’s benefit. Choosing the right trustee(s) can help ensure that not only your financial legacy and intentions will be carried out, but it will be done so professionally and objectively for your heirs’ benefit. The protector is not anobligatory party to trust, but maybe opted by the Settlor. Beneficiary Designations: Typically used for retirement plans and life insurance policies whereby assets or death benefit proceeds will pass directly to the named beneficiaries (primary/contingent). A revocable trust is owned by the settlor of the trust. Let’s say your trust needs to exist for a long time after you die. The trustee may also be a beneficiary, but not the sole beneficiary unless there is more than one trustee: but be careful of this as it is not best practice. History: 2013 a. Among other estate planning tools, the revocable living trust is gaining in popularity, especially among boomers.. Or, he may have a power trip and enjoy being in control of your beneficiary’s finances. This duty imposes personal liability on the Trustee to act in accord with the best interests of the beneficiary. The Trustee's Duty to Deal Impartially with Beneficiaries of All Kinds. In this case, your successor trustee will need to choose how the assets in your trust are invested and keep tabs on the investments. – Joe. My father divorced his wife 3 years ago. L. Start at the beginning. Having more than one trustee and beneficiary. Dear Mr. Premack: I have been told I cannot be the grantor, trustee, and beneficiary of my living trust because of something called the Doctrine of Merger.Is that true? Failure to answer truthfully would be a breach of truston behalf of the trustee. However, if you suspect that you may be a beneficiary then you can ask the trustee. An accounting is a detailed document that sets forth all the trust property in existence at the time your mother died and how much of the trust possesses now. Still, if the trustee is allegedly committing fraud or another crime, the beneficiary has a right to know and protect that beneficiary’s inheritance. The purpose of theprotector is to manage the trustee, thus presenting additional insurances tothe Settlor that the trust assets get adequately managed. The trustee of a trust has the following duties: 1. to familiarise itself with the terms of the trust – especially beneficiaries and trust property; 2. to act honestly, reasonably and in good faith; 3. to preserve and not waste the value of the trust assets; 4. to accumulate or pay income as directed by the trust instrument; 5. to advance or distribute capital as directed by the trust instrument; 6. to act with care and diligence at all times; 7. to avoid all conflicts of interest; 8. to maintain proper accounts. 92. If You Are Also a Beneficiary It's quite common to be both a trustee and a beneficiary of a trust. It is a lot of work and can carry significant legal complications if done improperly. While it is presumed that the trustee will act genuinely and in accordance with their duties, it is advisable that a settlor include more than one trustee when one of the beneficiaries is also the trustee. more Insurance Trust He died this year and still had the ex-wife as his beneficiary on retirement and life insurance policies. Unfortunately, some California trustees and executors abuse their powers and try to steal from innocent beneficiaries.. 701.0804 Prudent administration. The trustee of a discretionary trust has no obligation to tell you if you are a beneficiary of the trust. They have the right to expect the trustee to manage trust assets in good faith, and to prudently invest trust assets. Beneficiaries have the right to expect the trustee to manage trust assets for their benefit, not the trustee'… In addition, a beneficiary has the right to demand an accounting from the trustee. And it's quite common for one adult child to be the trustee and all the siblings to be beneficiaries of their parents' trusts. If the trustee does not provide the required notice, the beneficiaries can sue the trustee. The purpose of theprotector is vested in a committed friend or advisor of the Settlor. Beneficiaries will also have the right to ask for more information, such as a copy of the trust terms. The trustee, if different from the settlor, owes a fiduciary duty to the settlor. If you named your trust as the beneficiary of any life insurance policies, your trustee will also need to collect those policies. In cases of multiple beneficiaries, the beneficiaries may hold concurrent interests or successive interests. A trust is a fiduciary relationship in which the trustor gives the trustee the right to hold title to property or assets for the beneficiary. People often name relatives as successor trustees, but this can strain family dynamics and is not typically advisable if a corporate trustee … The trustee has a legal obligation. You may want someone with a little more distance who will see your beneficiaries … Beneficiary Designations Trump the Will . Trust Beneficiaries Have the Right to an Accounting. If the trustee disposes of trust property and acquires other property with the proceeds of the sale, the beneficiaries can enforce the trust on the newly acquired property. The trustee must either personally deliver a copy of the notice to the beneficiaries or mail the notice to them. Some people think an updated will is all you need. If a trust has 2 or more beneficiaries, the trustee shall act impartially in investing, managing, and distributing the trust property, giving due regard to the beneficiaries' respective interests and the purposes and terms of the trust. When that beneficiary’s 30 th birthday comes around, or if no designated representative is acting, the trustee must then notify that beneficiary of the existence of the trust, the beneficiary’s right to a copy of the trust instrument, and whether the beneficiary has the right to request trust accountings. The surviving spouse, for example, is almost always the successor trustee and beneficiary of a family trust. The trustee is then obliged to answer correctly and tell you whether or not you are a beneficiary. In exceptional circumstances,the protector may withdraw or substitute the trustee. Again, having help from a knowledgeable trust attorney can make all the difference, particularly if the beneficiaries have to remove the trustee and the court decides to appoint a new one. Indeed it is notable (remember what we said earlier) that the beneficiary cannot sue the thief (MCC Proceeds v Lehman Bros. [1998] 4 All ER 675). Trustees have the important job of deciding how the principal of the trust will be used. Typically, trusts contain both real property (real estate) and money, giving the trustee great discretion in how each asset is invested. To learn more about the rights of a beneficiary, take a look at the more commonly asked questions below that have been answered by Experts. Being named a trustee or executor of a will is a big responsibility.