This legal tool is an extension of one of the most important trustee duties in California for beneficiaries to understand: The duty to keep beneficiaries reasonably informed. If a trustee fails to fulfill this duty, working with a lawyer is essential to preserve your inheritance and the integrity of the trust.
Trustees must provide the majority of this information in a trust accounting at least once annually, or whenever beneficiaries request it. A trustee has 60 days to furnish you with this information upon your request.
If you have tried to communicate with the trustee alone or through attorneys and have still not received a satisfactory response, the next step may be to file a petition with your local court. Before taking this step, consult with an attorney with experience in trust administration.
What types of fiduciary duties does a trustee have to the beneficiaries? The fundamental duties of a trustee are as follows: (1) the duty of good faith and loyalty; (2) the duty of reasonable skill and diligence; (3) the duty to give personal attention; and (4) the duty to keep and render accounts.
The trustees must look after the trust property carefully for the benefit of the beneficiaries. In doing so, the trustees must act unanimously (if there's more than one) and always act in the best interests of the beneficiaries and not benefit themselves. We've set out the duties of trustees in more detail here.
A trustee must abide by the trust document and the California Probate Code. They are prohibited from using trust assets for personal gain and must act in the best interest of the beneficiaries. Trust assets are meant for the benefit of the trust beneficiaries and not for the personal use of the trustee.
Whether a particular individual has standing to sue a trustee for a certain reason may vary by jurisdiction, but beneficiaries almost always have standing to sue. A large part of a trustee's responsibility is prudently investing the trust funds. Most state laws contain prudent investment standards for trustees.
Dealing with a problem beneficiary
California executors can overrule beneficiary wishes based on the decedent's will or court orders, and align actions with legal requirements. Before making such decisions, it's wise to consult a probate attorney in order to comply with regulations and avoid potential disputes.
Examples of executor misconduct and trustee misconduct include: Failing to provide accountings to beneficiaries. Favoring one beneficiary over another. Misappropriating or misusing estate or trust assets for personal gain. Commingling personal assets with those of the estate or trust.
A trustee typically has the most control in running their trust. They are granted authority by their grantor to oversee and distribute assets according to terms set out in their trust document, while beneficiaries merely reap its benefits without overseeing its operations themselves.
As a result, they have a responsibility to keep beneficiaries reasonably informed about the activities of the estate and transactions made on its behalf. If an executor is not communicating with beneficiaries, beneficiaries have a right to petition the court to try to compel the executor to provide information.
Trust beneficiary rights include: The right to a copy of the trust instrument. The right to be kept reasonably informed about the trust and its administration. The right to trust accounting.
If the trustee is not paying beneficiaries accurately or on time, legal action can be taken against them.
Beneficiaries are entitled to request bank statements from the executor by making an informal written request for them. Some executors may attach bank statements to their accountings for added transparency without beneficiaries having to ask, but it's usually not a requirement for them to do so.
This is a fundamental concept of trust law: the separation of legal and equitable title. In other words, while the trustee has the legal authority to manage and control the assets, they do so not for their own benefit, but for the beneficiaries.
Beneficiary Rights and Accounting
According to California Probate Code section 10950, if more than a year has passed since the beginning of probate administration and an accounting has not been filed, interested parties are entitled to file a petition with the court to make the executor to complete an accounting.
Q: Can an Executor Withhold Money From a Beneficiary in California? A: Executors do not have the authority to act outside the guidelines stipulated in the will. An executor cannot withhold money from a beneficiary unless they are directed to do so through a will or another court-enforceable document.
Complaints from beneficiaries will often be about how the estate has been, or is being, administered. Scheme Rule 2.8 states that: The complaint must relate to services which the authorised person: provided to the complainant (the estate); or.
Per California trust law, if a trustee takes money from the trust for personal use, even if it's an authorized loan, then this action will be highly scrutinized, and there will be the presumption that they have breached their fiduciary duty of loyalty.
Beneficiaries Can Also Be Abusers
Beneficiaries, while they do not hold as much power over the assets in a trust as the trustee, are also capable of committing financial elder abuse.
Depending on the complexity of the case, it may cost anywhere from a few thousand dollars to $100,000 or more to dispute the terms of a trust.
But generally, the trustee is entitled to use trust funds to pay for things like: Funeral and burial expenses for yourself or a trust beneficiary. Expenses related to properties included in the trust, such as repairs or property insurance. Repaying any debts owed by your estate when you pass away.
Typically, a revocable trust with clear provisions for outright distribution might conclude within 12 to 18 months. However, in simpler cases, the process can take an average of 4 to 5 months without complications.
Common examples of trustee misconduct include: Fraud. Not following the terms of the trust. Mismanaging trust assets (e.g., failing to diversify investments, neglecting property maintenance, or making inadvisable financial decisions that hurt the trust's value)