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By: Scott Grossman on June 10th, 2024

Can a Trustee Deny You, a Beneficiary, Money?

When a loved one passes away, it can be an emotional and confusing time. If you’re a beneficiary, you might have questions about your rights and what you can expect. One of the most common concerns is whether a trustee can deny you, a beneficiary, money.

What is a trust

A trust is a legal document where one person or entity, the trustee, manages assets to benefit the beneficiaries. It is designed to ensure that assets are managed and distributed according to the wishes of the trust’s creator, the grantor. However, disputes can arise when beneficiaries feel they are not receiving their rightful share. This article will explore whether a trustee can deny money to a beneficiary and what steps you can take if this happens.

Understanding the Role of a Trustee

A trustee has a fiduciary duty to act in the beneficiary’s best interests. That means managing the trust’s assets responsibly . That includes making prudent investments, keeping accurate records, and distributing assets according to the trust’s terms. While trustees have significant authority and discretion, this power comes with strict legal responsibilities.

If y0u would like more information on trustee’s and trustee duties, check out the article “Understanding the Basics of Trustee’s Duties,” for a more comprehensive look at trustee’s fiduciary duties.

Rights of Beneficiaries in California

As a beneficiary, you have certain rights under California law. These rights protect your interests and ensure that the trustee is acting appropriately.

  • Right to Information: You have the right to be informed about the trust and its administration. That includes receiving regular accountings of the trust’s assets and transactions.
  • Right to Trust Distributions: You are entitled to receive distributions as specified in the trust document. The terms of the trust will outline how and when these distributions are made.

Reasons a Trustee Might Deny Money to a Beneficiary

There are several reasons why a trustee might deny a beneficiary money. Understanding these reasons can help determine whether the trustee’s actions are justified.

  • Terms of the Trust: The trust document may include specific conditions to be met before distributions can be made. For example, the trust might stipulate that beneficiaries receive money only after reaching a certain age or achieving specific milestones.
  • Discretionary Trust Provisions: Some trusts allow the trustee to decide when and how much to distribute to beneficiaries. That means the trustee can withhold distributions if they believe it’s in the best interest of the beneficiaries or the trust.
  • Protecting the Trust’s Interests: Trustees might deny distributions to preserve the trust’s assets or to protect the beneficiary’s long-term interests. For instance, if the trustee believes the beneficiary is not financially responsible, they may withhold money to prevent waste.

Legal Grounds for Challenging a Trustee’s Decision

If you believe a trustee is wrongfully denying you money, you may have legal grounds to challenge their decision.

  • Breach of Fiduciary Duty: Trustees must act in the best interests of the beneficiaries. If a trustee acts in their interest or mismanages the trust, they may breach their fiduciary duty.
  • Misinterpretation of Trust Terms: Sometimes, a trustee may misinterpret the terms of the trust. If you believe the trustee is not following the trust document correctly, you can challenge their interpretation.
  • Conflict of Interest: Trustees must avoid conflicts of interest. If a trustee stands to benefit personally from their decisions, this could be grounds for removal or other legal action.

Steps to Take if You Are Denied Money

If a trustee denies you money, there are several steps you can take to address the situation.

  • Requesting an Explanation from the Trustee: Start by asking the trustee for a detailed explanation of their decision. Understanding their reasoning can help you determine if their actions are justified.
  • Reviewing Trust Documents: Carefully review the trust document to understand the distribution terms and conditions. That will help you determine if the trustee is adhering to the trust’s instructions.
  • Seeking Mediation or Alternative Dispute Resolution: Mediation can effectively resolve disputes without going to court. A neutral third party can facilitate a discussion to reach a mutually agreeable solution.

Filing a Petition in Probate Court

If informal efforts to resolve the issue fail, you may need to file a petition in probate court.

  • Preparing Your Case: Gather all relevant documents, including the trust document, correspondence with the trustee, and any evidence of mismanagement or breach of fiduciary duty.
  • Court Procedures and Hearings: The probate court will review your petition and schedule a hearing. Both you and the trustee will have the opportunity to present your case. The court will evaluate the evidence and based on the local law and the terms of the trust will make a decison.
  • Possible Outcomes: The court may order the trustee to distribute, remove the trustee, or take other actions to protect your interests as a beneficiary.

If you would like more information on filing a petition in probate court, check out the Riverside Court Petition for Probate Checklist.

Hiring a Probate Attorney in California

Navigating trust disputes can be not only complex but emotionally draining. Hiring a trust litigation attorney can help you protect your rights and ensure the trustee is held accountable.

  • Importance of Legal Representation: An experienced attorney can provide valuable guidance. They can help you understand your rights, build a strong case, and advocate.
  • Choosing the Right Attorney: Look for an attorney with expertise in trust and probate law in California. A local attorney will be familiar with the nuances of state law and have a track record of success in trust litigation cases.

Dealing with the denial of trust distributions can be a frustrating and stressful experience, especially after the loss of a loved one. Understanding your rights and the legal processes can help you navigate this challenging time. If you believe a trustee is wrongfully denying you money, take proactive steps to address the issue. Seek an explanation from the trustee, review the trust documents, and consider mediation or legal action if necessary. By working with a qualified trust litigation attorney, you can protect your estate and ensure that the trustee is fulfilling their obligations. Remember, you have rights as a beneficiary, and legal avenues are available to help you enforce them.

Next Steps in the Probate Process

It is vital to hire a probate attorney in California. Their expertise, guidance, and knowledge of California probate laws are invaluable throughout the probate process. Whether you are an executor, beneficiary, or concerned family member, TGLF can assist you in fulfilling the legal requirements, maximizing the estate’s value, and minimizing potential conflicts or delays.

By seeking the assistance of a probate attorney, you can navigate the complexities of the probate process with confidence and peace of mind. If you need more guidance in the probate process, check out our Overview of the California Probate process.

If your case is in California and you’d like an honest opinion, fill out our Get Help Now form. Or contact our office today to schedule your free 30-minute phone consultation by calling us at (888) 443-6590.