When a person is a beneficiary of a trust, it’s important they know their trust beneficiary rights. This is common with something called an irrevocable trust. It means the person created the trust so the terms of it can’t be terminated or changed unless specific conditions are met. These conditions will be communicated in the language of the trust agreement. There is more than one type of trust beneficiary.
Beneficiary Of A Trust
A beneficiary is a person permitted to receive distributions of a trust’s income. Their status in regards to the trust is as a qualified beneficiary. A contingent beneficiary gets distributions of trust income if the interests of a current beneficiary are terminated, but the trust itself is not terminated. A remainder beneficiary receives distributions of trust income on a specific date when the trust is terminated. They should all know their trust beneficiary rights.
A trustee is responsible for managing the trust principle. Trusts usually consist of real property such as real estate and cash. The law requires trustees be prudent in handling a trust’s investments. Should a beneficiary have concerns about a trustee’s investment management, they have the right to get an accounting of the investments. The accounting report provided to the beneficiaries should detail each investment made and its performance in the market.
Should trust beneficiaries find the trustee is not doing their job, they can request a new trustee be appointed to manage the trust. It could possibly require them to file the proper legal documents with a court of local jurisdiction. Should the reason for the requested change be excessive losses of the trust’s principal, the trustee may be required to repay the trust. Courts have a history of following the intentions of the trust creator. In many cases, only serious infractions will require a new trustee.
The trustee has a duty to manage the trust and to act in the best interest of the beneficiaries of the trust. A trustee can be made liable for a serious loss of a trust’s assets. They are also responsible for income that a trust beneficiary would have received, but for the reckless conduct of the trustee. When this happens, trust beneficiaries can sue the trustee for breach of fiduciary duties.
A trust can be terminated if a court determines the wishes of the trust creator have been accomplished, or the trust’s current situations make it impossible to be accomplished. All beneficiaries associated with the trust must agree to the termination. This also includes a remainder beneficiary.
If someone would like to learn more about trust beneficiary rights, they can contact Felinton Elder Law. Call them today at (301) 610-0055.