3

I understand that a trustee is obligated to execute the terms of a trust and manage the trust assets on behalf of the beneficiaries. However, if the beneficiaries are not aware of certain details, it would seem to me that they would not be able to effectively determine that the trust is being managed properly.

When the principal in an estate trust dies, is there an obligation for the trustee to inform listed beneficiaries of any of the trust details? If so, at what point must that be done? To which beneficiaries must the trust details be disclosed? (I understand through hearsay that some beneficiaries have large entitlements, while others have minor entitlements.) To what extent must the trust details be disclosed?

This is in the state of California.

1

is there an obligation for the trustee to inform listed beneficiaries of any of the trust details?

If that is in the best interests of the beneficiaries as reasonably determined by the trustee.

at what point must that be done?

At the point where it is in their best interest.

To which beneficiaries must the trust details be disclosed?

To the ones it needs to be disclosed in the best interest of all the beneficiaries.

To what extent must the trust details be disclosed?

To the extent that the law requires (e.g. to tax authorities, or courts) and to the extent and to whoever is in the best interests of the beneficiaries for it to be disclosed.

You are making a mistake in thinking that the beneficiaries have any say in how the trustee operates the trust - the beneficiaries don't decide what their best interests are: the trustee does. Providing the trustee abides by their fiduciary duty (i.e. they act in accordance with the trust deed, the law, prudently and reasonably in the beneficiaries' best interest (as a collective and as judged by the trustee)) then it is not open to the beneficiaries (either as individuals or a collective) to second guess them. Of course, if the trustee breaches that duty then the anyone with standing (which would include the beneficiaries) could ask the court to intervene - its certainly arguable that refusing to provide the beneficiaries with details of the operation of the trust may be a breach of that duty - but maybe not.

1

The document Settling the Revocable Trust in California - A Primer for the Non-Professional Trustee (Toews & Murphy, Inc.) describes the disclosure responsibilities of the successor trustee in rather clear terms for a revocable living trust.

First, it says

Since the early 1980s, revocable trusts have become popular as estate planning tools in California because (a) they usually avoid the need for court proceedings to settle the estate of the person who set up the trust (“settlor”) and (b) they usually avoid the need for the court appointment of a conservator in the event that the settlor is incapacitated. For these reasons, most professionally prepared estate plans for people with significant assets use these trusts.

Given that this would apply in most cases, I will assume that the trust in question is this type.

The document states

the trustee is responsible for seeing to it that all required notices of administration are given

As Dale M alludes to in his earlier answer

The trustee ordinarily consults with beneficiaries on the conduct of trust business – for example, on whether to retain or sell real estate or whether to cash in stocks, bonds or other investments. However, the trustee has sole authority to actually make decisions on these matters, subject only to the trustee’s duty to be fair, to follow any restrictions in the trust document and to act in the best interest of the beneficiaries.

However, in California (an maybe other states), there is a specific legal requirement that Giving Notices of Administration includes the following (from the same document):

The California Probate Code was amended in 1997 to require the trustee to give notice of administration to beneficiaries and legal heirs of the settlor upon the settlor’s death. The notice must be in a specific statutory format and must advise recipients that they are entitled to a copy of the terms of the trust if requested. Usually, these notices are prepared by the attorney representing the trustee and sent out to each heir and beneficiary together with a copy of the trust. (Prob. Code § 16061.7)

The Probate Code has the following provisions:

(b) The notification by the trustee required by subdivision (a) shall be served on each of the following:

(1) Each beneficiary of the irrevocable trust or irrevocable portion of the trust, subject to the limitations of Section 15804.

(2) Each heir of the deceased settlor, if the event that requires notification is the death of a settlor or irrevocability within one year of the death of the settlor of the trust by the express terms of the trust because of a contingency related to the death of a settlor.

Finally, to the point of the original question:

(g) The notification by trustee shall contain the following information:

(1) The identity of the settlor or settlors of the trust and the date of execution of the trust instrument.

(2) The name, mailing address and telephone number of each trustee of the trust.

(3) The address of the physical location where the principal place of administration of the trust is located, pursuant to Section 17002 .

(4) Any additional information that may be expressly required by the terms of the trust instrument.

(5) A notification that the recipient is entitled, upon reasonable request to the trustee, to receive from the trustee a true and complete copy of the terms of the trust.

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.