If you are the beneficiary of a trust, you have certain rights under Ohio law. Exactly what these rights are depends somewhat on the type of trust you expect to benefit from. Many people create revocable living trusts during their lifetime, with their descendants named in the trust document as beneficiaries after their death.
Frequently, with a revocable living trust, the creator of the trust (also known as the grantor, settlor, or trustmaker) not only funds the trust, but serves as both trustee and beneficiary during their lifetime. The word "revocable" in the name of the trust means, simply, that the settlor can revoke the trust at any time, destroying the interest of any future beneficiaries. Under these circumstances, the beneficiaries have very few rights. They cannot compel the grantor not to revoke the trust, or to manage assets in a certain way.
After the settlor dies, however, the trust is no longer revocable. A successor trustee takes over, and the named beneficiaries do have rights. The trustee is obligated to meet them
Knowledge, it is said, is power, and a trust beneficiary's primary right is to information. A trustee has an affirmative obligation to keep beneficiaries reasonably informed regarding the administration of the trust. Furthermore, if a current beneficiary requests information regarding trust administration, the trustee is obligated to respond promptly to him or her.
The information to which trust beneficiaries are entitled includes that most basic of facts: who is managing assets for their benefit. Within sixty days of accepting the role of trustee, the new trustee must notify all current beneficiaries of his or her name, address, and telephone number. Also, within sixty days of learning the creation of an irrevocable trust, or that a previously revocable trust has become irrevocable, the trustee is required to inform all current beneficiaries of the existence of the trust, the identity of the settlor(s), their right to request a copy of the trust instrument (the document that created the trust) and their right to a trustee's report.
The trustee's report is a document that informs beneficiaries at least once a year of the trust property, liabilities, receipts, and disbursements. This information includes a listing of trust assets as well as the source and amount of any compensation paid to the trustee. In addition to annual reports, a trustee's report must also issue on the termination of the trust. With regard to the trustee's compensation, current beneficiaries also have the right to be informed of any change in the amount or rate of a trustee's compensation.
We have referred frequently in this post to "current beneficiaries" and their rights. A trust may have future beneficiaries as well. Let's say that Chris established a living trust, with Lee as the beneficiary after Chris' death, and Chris and Lee's children as beneficiaries after Lee's death. After Chris's death, Lee is the current beneficiary and the children, Alex and Sam, are future beneficiaries. Do Alex and Sam have any rights?
While the trustee is not required to provide the information above to Alex and Sam, he or she may choose to do so. Similarly, although Lee would be entitled to the information described, Lee could choose to waive that right. Lee could also, at any time, withdraw the waiver.
Of course, beneficiaries have the right to more than information. They have the right to expect the trustee to manage trust assets in good faith, and to prudently invest trust assets. If there is more than one beneficiary, each beneficiary has the right to expect the trustee not to act partially, favoring the interests of one beneficiary over the other(s). Beneficiaries have the right to expect the trustee to manage trust assets for their benefit, not the trustee's own, or that of anyone other than a beneficiary. Naturally, beneficiaries also have the right to receive distributions as provided for in the trust instrument.
Having rights is meaningless if there is no way to enforce them. While most trustees carry out their duties diligently and faithfully, there is always the possibility that a trustee will fail in their obligations, whether intentionally or otherwise. In that case, a beneficiary (or a co-trustee) may petition the court to remove a trustee, or the court may remove a trustee on its own initiative.
A trustee can be removed because he or she has committed a serious breach of trust, or because he or she has refused to cooperate with a co-trustee, impairing administration of the trust. A trustee may also be removed from his or her position due to unfitness, unwillingness, or persistent failure to effectively administer the trust, leading the court to conclude that removing the trustee is in the best interest of the trust's beneficiaries.
If you are the beneficiary of a trust and believe that your rights under the trust are not being honored, contact an experienced probate and trust litigation attorney.
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