The last few generations have seen an immense growth in wealth that can be transferred to family members. They have also seen an increase in the types of temptations available to those family members: More drugs, more frivolous items to spend on, more high-risk business opportunities that don’t pan out. So wealthy family members leave these bequests using trusts, so the funds may be protected from the beneficiary, for the beneficiary. But what happens when a beneficiary can’t find their copy of the trust, and what rights does that beneficiary have over those funds?
I see this problem at least once per week: The beneficiary’s parent / grandparent / uncle left them funds in a trust, but the beneficiary (1) has a bad relationship with the trustee, (2) wants or needs more of the trust’s funds, and (3) the trustee refuses to share any information with the beneficiary. Here are some of the rights a trust beneficiary has:
- A right to receive a copy of the trust from the trustee: this is important if a beneficiary is claiming the trustee is withholding funds, because the trust document says what the beneficiary is entitled to receive them (be prepared: it may not be as much money as you might have wanted); this is your first step, and I cannot stress enough how important it is that you get a copy of the trust.
- A right for an occasional accounting from the trustee: a beneficiary is permitted to confirm the trustee is not absconding with trust funds and investing them properly, so you can request copies of investment statements, informal book keeping, or a formal judicial accounting.
- A right to demand trust property the beneficiary is entitled to, though you should first have an attorney review the trust before you try to push around a trustee who doesn’t actually have to give you anything.
A trustee who has not been fulfilling his or her duties to responsibly invest and distribute trust funds and readily share trust information can be removed from serving as trustee. But a beneficiary who receives funds from a trust where the trustee has full discretion should tread lightly: Remember that a trustee who has the power to distribute nothing to you will be pretty unhappy if you try to begin an action against him or her in court.
The sad truth is that the beneficiary is usually in a disadvantaged position: They are often trying to get money because they don’t have enough money, so they can’t even hire the most entry-level legal representation. And a favorable outcome is never guaranteed (especially when the lawyer can’t immediately look at the trust), so they are unlikely to risk doing work in the hope of future legal fees paid by the trust that never materialize. Get a copy of the trust, save up money for an initial retainer, share the trust with an attorney, and work with him or her to inform yourself and increase your rights.
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