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What Are Your Rights as a Trust Beneficiary?

Trust Beneficiaries are Entitled to Yearly Trust Reports and Other Information

Trust reports should be mailed out annually to the beneficiaries and should indicate the Trust’s income and expenses, including commissions paid. If, upon request, the trustee fails to send out at least one annual report and refuses to do so, the beneficiaries have the right to request a reporting of the trust from the court.  See Surrogate’s Court Procedure Act (“SCPA”) §2306-Annual Statements to be Furnished to Beneficiaries and SCPA §2102- Proceedings for Relief Against a Fiduciary (to supply information relevant to the interest of the petitioner, if the fiduciary fails to provide same after request made); SCPA §2114 Review of Compensation of Corporate Trustee.

Trust Beneficiaries Have the Right to an Accounting

Trustees must act prudently with investments, diversifying the investment of assets and not invest in high risk investments, which could limit returns. If a beneficiary has questions or concerns about the trustee’s investment decisions, they can request an accounting summarizing all of the Trust’s transactions. This accounting report will detail every transaction including every investment and its related capital gain and loss. SCPA 2205, Compulsory Account, Who May Petition.
Trust Beneficiaries Can Request a New Trustee

If the trustee is being difficult, uncooperative, or refusing to do their job, you can request a new trustee by filing a petition with the court requesting a ruling. If the reason for the request is because of large losses of income or principal, the trustee may also be required to repay the trust. Keep in mind that courts always do their best to honor the intentions of the trust’s creator (the grantor), so only extremely egregious actions will justify a change.  See SCPA §711-Suspension, Modification, or Revocation of Letters or Removal for Disqualification or Misconduct.

Trust Beneficiaries Can Sue the Trustee

A trustee has a fiduciary duty to act in the best interest of the trust beneficiaries, if they do not, the trustee can be held liable for loss of trust assets.  The trustee owes a duty to the beneficiaries to act with due care, diligence, loyalty and impartiality. Making poor investment decisions or profiting personally, may cause the trustee to be held personally liable. See Estate’s Powers and Trusts Law (“EPTL”) 11-2.3, Prudent Investor Act, §11-A-1.3, Fiduciary Duties, General Principals.

Trust Termination

A trust can be terminated if the court determines that the intent of the creator of the trust has either already been accomplished or cannot be accomplished, for various reasons, if all the beneficiaries of the trust are “adults of sound mind” and all, including the remainder beneficiaries, agree. Some trusts are difficult to terminate, such as spendthrift trusts where the settlor clearly intended that the trust assets be withheld and protected from the beneficiaries and their creditors. See EPTL 10-6.6 Decanting Trust (this is a Trustee power).