What to Do When a Beneficiary is Living “Off the Grid”
These days, it seems you can find people, even those you haven’t seen in years, in a matter of moments. A quick internet search can find that long-lost friend or second cousin, yielding social media accounts, emails, phone numbers and even physical addresses. It may feel as if it is impossible to escape the sticky tendrils of the aptly-named “world-wide web.” Even in death, digitized Social Security death records, ancestry sites, and websites like findagrave.com mark a person’s existence and passing.
Most people, when creating or updating a trust, don’t anticipate the possibility that one of their beneficiaries will simply disappear without a trace. Yet this very outcome happens with disturbing frequency. Online trails may go cold, and there may be no conclusive evidence that a beneficiary has died. What happens to a trust when a beneficiary is living off the grid, or perhaps not living at all?
How Does a Beneficiary Disappear?
It may seem impossible that someone who is the beneficiary of a trust would walk away from thousands or hundreds of thousands of dollars, but it happens all the time. Beneficiaries may not be aware that they have a trust fund. Or more pressing life circumstances may make the existence of the trust recede in the beneficiary’s mind.
There are any number of scenarios in which a trustee might have difficulty locating a beneficiary of a trust, especially if they are living off the grid. People move away from their families and lose touch or become estranged. They may change their name. They may develop mental illness or drug addiction. A lack of steady employment or income may mean frequent moves or even homelessness, and usually little internet footprint. Before long, it can be difficult to trace or track the person—assuming long-neglected family members or friends even care to try.
There are also trusts that are created for the benefit of a child after a parent’s death, such as when there are proceeds from a wrongful death suit held in trust for the child until they reach the age of the majority. If the surviving parent moves away with the child and does not notify the trustee, a professional trustee (fiduciary) may be unable to locate the child when it is time to make a distribution from the trust.
What Happens When a Trustee Can’t Locate a Beneficiary?
After the creator of a trust passes away, the successor trustee is often a professional fiduciary. He or she may send communications to beneficiaries of a trust only on an annual basis. Those communications may not require the beneficiary to take any action. It may be only when it is time to make a distribution or terminate the trust that a trustee realizes the beneficiary is missing. A letter may come back marked “Addressee Unknown,” and then the trustee needs to track the beneficiary down in order to make distributions and terminate the trust. The trustee is obligated to honor the beneficiary’s rights under the trust, but that can be difficult if they cannot reach the beneficiary.
Like most of us do when trying to track someone down, a trustee may turn to the internet first. If an internet search does not yield any current contact information, the trustee may need to engage professional help. There are numerous local and national companies devoted to tracking down missing heirs. Sometimes these services, or a private detective, can find a missing beneficiary, even if they are living off the grid. If not, a beneficiary may be stuck.
What Does Ohio Law Require When a Beneficiary Cannot Be Found?
Surprisingly, Ohio law does not have a lot to say about next steps when a beneficiary of a trust cannot be located and the trust needs to be terminated. Ohio Revised Code Sections 2113.64 and 2113.65 deal with the investment of unclaimed funds and the disposition of those funds. These provisions apply only to probate estates, however, not trusts (though it is possible that a trust created in a will might be encompassed by these sections). Some trustees have obtained permission from the probate court to dispose of trust funds as these provisions direct—that is, by depositing them with the County Treasurer. If the long-lost beneficiary turns up after being off the grid, the trustee can direct him or her to the County Treasurer’s office to recoup their property.
Of course, there is a simpler solution, but it requires a bit of foresight. If you are creating a trust for the benefit of family members, especially young family members who may not receive distributions from the trust for many years, anticipate this scenario in planning. The addition of a few words to your trust can direct a future trustee as to what steps to take if they cannot locate a missing beneficiary after diligent attempts.
Does your trust provide instructions on what to do if a beneficiary goes “off the grid?” If not, consider an update. An experienced estate planning and trust administration attorney can help you plan for this and other contingencies so that trust administration can proceed smoothly and your beneficiaries receive the assets you intended them to have.