A trust is a legal agreement between three parties: the trustor (many times called the grantor), trustee, and beneficiary or beneficiaries. The trustor creates the trust agreement; the trustee is responsible for managing the trust property that has been transferred into the trust; and, the beneficiaries receive the benefits of the property titled to the trust. In order to protect the rights of trust beneficiaries to whatever benefit they are due according to the trust, the law provides beneficiaries with ways to monitor the trust and the trustee.
Trust beneficiaries are usually entitled to income from the trust (and sometimes principal), and the trustee is responsible for making sure that assets from the trust are invested well and productive. The rights of trust beneficiaries to monitor both the trust and the actions of the trustee in regards to the trust give the beneficiaries some ability to look out for their own interests. Below are several rights beneficiaries have:
- The right to receive yearly reports
These trust reports contain information for the beneficiaries such as how much income was produced by the trust and the expenses and commissions that were paid out. Traditionally, trust reports should be mailed out annually to the beneficiaries. If the trustee fails to send out at least one annual report, the beneficiaries can request the report from the court.
- The right to an accounting
Trustees generally have a great deal of discretion regarding how to invest the trust assets. Therefore, trustees are legally obligated to invest prudently (e.g. diversify, limit risk, etc.) If a beneficiary has questions or concerns about the trustee’s investment decisions, they have the right to request an accounting of investments.
- Request a new trustee or sue the existing trustee
If a trustee is being difficult, uncooperative, or refusing to do their job, beneficiaries can request that the trustee be removed and a new trustee appointed. This requires a legal filing and a ruling by the court. In the event the trustee has acted against the best interests of the trust beneficiaries, the beneficiaries may sue the trustee and the trustee may be responsible for damages to the trust.
Our office has the knowledge and experience you need to help you understand your choices and make informed decisions. Please contact us online or by phone at (517) 548-7400 in Livingston County and (586) 751-0779 in Macomb County if we may be of assistance.