Trustee Duties: Are you entitled to an accounting as a Beneficiary?
Are you a beneficiary, and are you unaware of your Trustee’s duties, and whether or not, as a Trustee, they are entitled to account?
Further, have you wondered if your Trustee is acting in your best interest? Do you want to know what you can do if they aren’t?
Let’s talk about your rights as a Beneficiary and the duties of loyalty your Trustee must follow to stay your Trustee.
Here at The Grossman Law Firm, we have guided Beneficiaries on their rights and their Trustee’s responsibilities for over twenty years.
Further, in this article and video, you will learn:
- Are you entitled to accounting as a beneficiary?
- Are there exceptions for your Trustee not accounting?
- What to do if your Trustee refuses to account?
Are you entitled to accounting as a beneficiary?
A Trustee must account to each Trust Beneficiary to whom income or principal is required or authorized allocation at the Trustee’s discretion. In practice, the Trust says you get principal or payment. Then you are entitled to an account. It also means that if the Trustee has the discretion to distribute principal or income to you, even if not allocated to you, you are entitled to an account.
California’s Trust Law requires a trustee to account:
- At least annually;
- At the termination of the Trust; and
- Upon a change of Trustee.
So, are you entitled to an account as a beneficiary? The answer is yes. But it can be a little complicated. Let’s examine these a little more.
Annually means what you think. Your Trustee must account at least once per year. Trust termination implies the administration of the Trust is coming to an end. The Trustee will often file an account that proposes distributing all or nearly all of the remaining estate. That type of account satisfies the requirement to account at Trust termination. Finally, even if your Trustee was removed or resigned, they must account for when there is a change of Trustee. If the difference is due to a trustee’s death, the probate court judge will likely require the new Trustee to account for the old Trustee.
Are there exceptions for your Trustee not accounting?
A Trustee is not required to account:
- If the Trust waives the requirement to account (though there are some exceptions to this exception);
- To a beneficiary who waives an account;
- The Revocable Trust can be revoked (while the settlor is alive and mentally competent);
- When the Trustee and Beneficiary are the same.
If the Trust waives the requirement to account, the Trustee does not have to account. Some technical exceptions to this rule are too much to include in this video. Just understand that the Trustee has materially breached their duties if it is reasonably likely. They can still account. If that is your situation, don’t just give up. Discuss your case with a trust litigation attorney.
What to do if your Trustee refuses to account?
Even when you are entitled to accounting as a beneficiary, sometimes a Trustee will still not do their duty, so you must send them a written demand for an account. If you don’t receive an accounting, nothing will happen on its own.
You must file a lawsuit to get the court to order the Trustee to account. You need the account to evaluate what the Trustee has done with the trust property while serving as Trustee. If you discover the Trustee caused any financial harm, then you may want them removed as a Trustee, and you may also want to see them surcharged. A surcharge is just probate court jargon for a damages order against the Trustee.
Do you know the basics of proper trust administration?
Please review our articles on the Beneficiary’s Rights in California, Successor Trustee Tax-Related Duties, and Removing a Trustee in California. If you would still like some more information on Trust Litigation and removing a trustee, check out our complete Overview of California Trust Litigation, available on our website. And if you have more questions about your rights as a Beneficiary and what you should know moving forward.
Are you still having trouble, have any questions, or want to talk to someone about your case, please give us a call or fill out our Get Help Now form.
If this aligns with what’s happening to you, it’s best to reach out as soon as possible. The longer you take, the more damage your Trust could take. Please call us at (888) 443-6590, and we would be more than happy to see if we can assist you.