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By: Scott Grossman on August 6th, 2021

Irrevocable Trust Beneficiary Rights in California

Irrevocable Trust Beneficiary Rights in California (Article)

Did your parent or grandparent use a trust for their estate planning?  Are you wondering what your rights are now that they have passed away?  When a trust becomes irrevocable, the beneficiary’s rights are quite powerful under California law. 

When You Get Your Rights as Trust Beneficiary under California law

While your loved one is alive, you don’t have any rights as a trust beneficiary unless the trust was created as an irrevocable trust.  That’s very uncommon unless there is some sort of special case planning going on.  That would include very large estates (estates large enough to be subject to estate taxes), Medi-Cal planning, and plans for children with special needs.

What most commonly happens is a trust is created as a revocable trust.  It becomes irrevocable when the person or people who created the trust die.

Your Rights as the Beneficiary of an Irrevocable Trust

When a loved one dies and you believe you will inherit, there are always a number of questions and desires to make sure you receive your rightful inheritance.  The way to do that is to know your rights as the beneficiary of an irrevocable trust and to enforce those rights.

Nearly every trust beneficiary wants the same 3 things:

  1. A copy of the trust, 
  2. The trustee’s plan to administer and distribute the estate, and 
  3. The ability to review the trust’s finances. 

In purely technical terms, you don’t have rights as a beneficiary.  The trustee has duties.  In practice, those duties mean the trustee must perform certain tasks, and the failure to do those tasks gives you the ability to go to court.  So, in practice, you do have rights as a trust beneficiary.

Your Right to Get a Copy of the Trust

People commonly believe the trustee must send them a copy of the trust after the death of their loved one.  That’s false.  The trustee is required to send you a notice that they have become trustee due to the death of the person or people who created the trust.  They are required to send that notice within 60 days of becoming trustees.  The notice must tell you that you are entitled to get a copy of the trust by making a reasonable request. But the truth is many trustees don’t tell you.

The good news is if you send the trustee a written demand for a copy of the trust, whether or not they gave you the right notice, then they have 60 days to send you a copy of the trust.  If 61 days go by and you have not received your copy, then a petition can be filed in probate court to order the trustee to provide you with a copy of the trust. So, that 60-day period is your key to getting into probate court.  If 61 days have gone by, then it’s time to talk with an attorney.

Your Right to Know the Trustee’s Plan to Administer and Distribute the Estate

Under California Trust Law, your trustee has a duty to keep you reasonably informed about the administration of the trust.  What this means in practice will vary from one trust to another.  At a minimum, your trustee should tell you what assets are in the trust and any potential problems the trustee believes may arise during the administration of the trust.

At the beginning of trust administration, your trustee may not have a lot of detail.  For example, they may only be able to tell you there is a house and brokerage account without being able to give you details on the asset’s values.  Further along, they should be able to give detailed information about asset values and also let you know about liabilities such as a mortgage on a house or loans secured by the account.

Your trustee should also be able to give you approximate time frames when certain tasks will be done.  For example, the house will be emptied in the next month, repairs and cleaning will be done in the following two months, and the house will be listed for sale the month after that.  Plans may change if unexpected things occur.  That’s okay if your trustee is addressing items needing attention.  It’s a problem if things are just getting pushed back because your trustee won’t get anything done.  

The danger to a beneficiary is if there is no plan and no information is provided.  If your trustee won’t communicate with you, then a petition can be filed to instruct the trustee to take needed actions or to remove the trustee.  If your trustee is not communicating with you despite your efforts to communicate with the trustee, then it’s time to talk with a lawyer.

Right to Detailed Financial Information About Trust Assets

Your trustee must account for you. [hotlink to Trustee’s Duty – Duty to Account]  In the world of trusts, an account is a combination of a balance sheet and income and expense statement.  A trust account tells you the assets the trust owned on the date of death and their values, all property received by the trust, all income received by the trust, all disbursements made from the trust, and all property on hand at the end of the accounting period.  All entries showing anything coming into the trust or out of the trust must report the date, the person or entity, the amount, and the purpose or reason for whatever came in or went out.

What your trustee does not have to do is give you all the underlying records for the account.  If you believe the account is inaccurate or falsely reports the trustee’s actions, then your attorney can object to the account for you and litigate it.  During litigation, your attorney can get access to the underlying records.

Your rights as the beneficiary of an irrevocable trust are quite powerful when they are used.  And they must be used in order to get you your rightful inheritance.

If you are ready to discuss your case then please give us a call or fill out our contact form.  If you want more information about trust litigation in California then click here.