Leaving a lump sum to a beneficiary is often not the wisest course of action, which is why many people choose to pass down an inheritance through the use of a trust fund in lieu of a lump sum gift. If you recently found out that you are a beneficiary of a trust you likely have a number of questions regarding your status as a beneficiary. At the top of that list of questions is likely “What rights do I have as a beneficiary of a trust?” Knowing your rights as a beneficiary is important because, ultimately, all, or a portion, of the assets held in the trust are yours.
A trust is a legal arrangement wherein a “Settler” or “Grantor” appoints a “Trustee” to hold and manage assets for the benefit of a third party, the “Beneficiary.” Trusts are first divided into “testamentary” and “living” trusts. A testamentary trust is one that does not take effect until the death of the Grantor whereas a living trust takes effect as soon as all the formalities of creation have been satisfied and the trust has been funded. Living trusts are then further divided into revocable and irrevocable living trusts. A revocable living trust is one that can be modified or revoked at any time by the Grantor. An irrevocable trust, once established, cannot be modified or revoked.
As a beneficiary of a revocable living trust you have very few rights because the Grantor can modify the terms of the trust, or even remove you as a beneficiary, at any time. While you are a beneficiary, however, you do have a right to communicate with the Trustee and remain informed about trust business. You also have a right to any distributions to which you are entitled pursuant to the terms of the trust.
As the beneficiary of an irrevocable living trust, or a testamentary trust, you have considerably more rights. If you are a current beneficiary, you have even more rights than a remainder beneficiary. Current beneficiaries are those who are entitled to distributions right now. Remainder beneficiaries are those who are entitled to distributions at some point in the future. As a current beneficiary, and sometimes as a remainder beneficiary, you are entitled to:
- ·Communication from the Trustee on a regular basis.
- ·Be kept informed about trust business.
- ·An accounting showing profits, losses, and distributions.
- ·Distributions pursuant to the terms of the trust.·Petition to remove the Trustee if the Trustee is not doing a good job.·Petition to terminate the trust for good cause.
Finally, as the beneficiary of any trust you also have any specific rights granted to you within the terms of the trust agreement itself.
If you have additional questions or concerns about your rights as a beneficiary of a trust, contact the experienced New York estate planning attorneys at The Law Offices of Kobrick & Moccia by calling 800-295-1917 to schedule your appointment.