Trust Beneficiary Rights & Can A Trustee Be Sued?

Yes, where a trustee mismanages a trust, the beneficiaries have the right to sue the trustee.

By Brad Nakase, Attorney

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Have a quick question? I answered nearly 1500 FAQs.

What Rights Does the Beneficiary of a Trust Have?

If an individual is a trust’s beneficiary in the state of California, then he or she should be aware of their legal rights. If you suspects a trustee breached his fiduciary duty, please contact our civil litigation lawyer to sue a trustee.  The following list pertains to the basic rights of a beneficiary in California.

  • Get Trust Document Copies

Beneficiaries of a trust have the right to obtain copies of trust documents when requested. A beneficiary should get copies when either of the following occurs:

  • The trust is irrevocable
  • When the trust creator(s) dies (grantors)

Beneficiaries and relatives (heirs) should get trust copies in the mail shortly following the death of the final grantor. Should the trustee not mail trust copies as required, then the beneficiaries must ask for written copies.

Can a trustee be sued for failing to act in the best interests of the beneficiaries? Yes, a trustee can be sued for failing to act in the best interests of the beneficiaries. Trustees are legally bound by their fiduciary duties, which include the responsibility to act prudently and solely in the interests of the beneficiaries. If a trustee breaches this duty by making decisions that are not in the beneficiaries’ best interests, beneficiaries or interested parties may have grounds to sue.

  • Get Notified of How Long to Counter Validity of the Trust

Heirs and trust beneficiaries have the right to get a mailed notice known as the Statutory Notification by Trustee. The trustee is required to mail a notification, in addition to trust agreement copies, to all the heirs and beneficiaries of the trust’s deceased grantor. Even excluded or disinherited heirs are still permitted to get copies of this notification and any pertinent documents.

This notification needs to include the contact information of the trustee. This form must also provide a necessary note about the timeline to file a lawsuit in court to try to challenge the legitimacy of the trust. If an individual decides to petition the court to reject a trust, he or she must have evidence that the trust was established or changed under unusual circumstances. These circumstances may include psychological inability of the trust creator, coercion (force), fraud, or elder manipulation.

There is a tight deadline to counter a trust’s legitimacy in court. A lawsuit needs to be filed within 120 days of the issuance of the statutory notification by trustee. If no suit proceeds within that time frame, then the trust is assumed to be legitimate. The beneficiaries and heirs will thereafter be prevented from contesting the legitimacy of the trust.

It is important that trust heirs and beneficiaries consult a trust lawyer with regard to timeframes. There exist many different kinds of lawsuits related to trusts, each with its own deadline. Rather than make guesses about deadlines or try to figure out which deadline is relevant, trust beneficiaries and heirs should speak with a trust lawyer about suspicions regarding either the trust agreement or the actions of the trustee.

For instance, if the 120-day limit for contesting the trust’s legitimacy has passed, disinherited heirs cannot contest the trust. That said, the beneficiaries are still permitted to file another kind of lawsuit related to mismanagement of the trust’s assets and distributions.

  • Get Financial Information

The beneficiaries of a trust have the right to get financial information and communication about the assets of the trust when they request something of the trustee. A beneficiary can also ask for financial records like bank statements, closing statements, appraisals of real estate, investment information, and any other relevant documents. It is possible the trustee might require time after the death of the grantor to collect financial data and to get access to the trust’s assets. Beneficiaries should review the trust’s terms and speak with a lawyer to see if they are eligible for a trust accounting.

An accounting will include basic information such as a record of the assets belonging to the trust, the worth of each asset, the share of each beneficiary, any expenses incurred by the trustee, and a record of what money has left the trust’s accounts. The terms of the trust, in addition to the courts, create the regulations for such accountings.

Should a trustee decline to supply financial information, then the beneficiaries of the trust may wish to speak with a lawyer about asking for a casual or court-ordered accounting.

In what circumstances can a trustee be sued for mismanagement of assets? A trustee can be sued for mismanagement of assets under various circumstances, primarily when they breach their fiduciary duties.

  • Equal Trustee Treatment

In a situation where there is more than one beneficiary, a trustee cannot favor one individual over another. Also, a trustee cannot unfairly serve themselves. Trustees have a duty to be faithful to the beneficiaries and are required to act in accordance with the terms of the trust when it comes to distributing the assets of the trust to the beneficiaries in accordance with the grantor’s wishes.

Can a trustee be sued if they fail to distribute assets according to the trust’s terms? Yes, a trustee can be sued if they fail to distribute assets according to the terms outlined in the trust document. Trustees have a legal obligation to follow the instructions and terms of the trust faithfully. If they fail to distribute assets as directed by the trust or unreasonably delay distributions without valid reasons, beneficiaries or interested parties might have grounds to bring a lawsuit against the trustee.

  • Get Fair Share of Assets

One of the most critical rights of a beneficiary is their right to get their assigned portion of assets in line with the trust’s terms. A trustee is not permitted to refuse or withhold a beneficiary’s assets. This is the case even if the beneficiary and trustee do not see eye to eye. Trustees are above all expected to act in accordance with the trust’s terms. The trust’s beneficiaries are therefore legally permitted to get their portion of the assets unless there is a certain clause in the trust that permits the trustee to withhold funds for a certain reason or set time.

Can A Trustee Be Sued?

Can a trustee be sued if they breach their fiduciary duties? A beneficiary may sue a trustee in court over violation of their fiduciary duty. If a beneficiary has reason to believe they have been denied their rights, then they should contact an attorney for legal assistance. This may include the refusal to supply financial data, the misappropriation or theft of trust assets, the failure to handle investments, the refusal to dole out assets in a reasonable amount of time, etc.

Under what legal grounds can a trustee be sued for negligence? A trustee can be sued for negligence if they fail to fulfill their duties with the level of care, prudence, and diligence expected of them. Negligence, in the context of trusteeship, refers to a breach of the duty of care owed to the beneficiaries.

Can a trustee be sued for conflicts of interest or self-dealing? Yes, a trustee can be sued for conflicts of interest or self-dealing. Trustees have a fiduciary duty to act solely in the best interests of the beneficiaries and to avoid any situation where their personal interests conflict with those of the trust or its beneficiaries.

An experienced trust lawyer can take action against the trustee and ensure the distribution of assets to beneficiaries.

Have a quick question? We answered nearly 2000 FAQs.

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