If a loved one made you the beneficiary of a trust, it’s wise to thoroughly review the terms of the trust as soon as you’re able to. Even if you already knew about it, it’s possible that your loved one made changes prior to their death.
It’s also important to communicate with the person your loved one designated as the trustee. They’re responsible for maintaining the trust assets and distributing them according to the terms designated by your loved one (the grantor or creator of the trust).
It’s important to understand what responsibilities the trustee has. For example, they may be responsible not just for the distributions but for seeing that the assets are invested so they’ll grow over time. That’s often the case if the trust is intended to provide income over a number of years.
Your rights as a beneficiary
As the beneficiary, you may feel like you have little or no control over the assets in the trust. That’s intentional and often in the best interests of you as the beneficiary. For example, if it’s an asset protection trust that’s designed to be out of reach of creditors and soon-to-be-ex-spouses, you can’t have any direct control over it. That doesn’t mean, however, you don’t have recourse if a trustee isn’t abiding by their fiduciary duties.
As the beneficiary, you have the right to request an accounting of the trust if you have any concerns about how it’s being managed – or even on a regular basis, like quarterly. That includes a summary of the trust’s income, expenses and distributions.
If you believe the trustee isn’t managing the trust responsibly or honestly, you may be able to seek their removal. Under Texas law, the two key reasons a trustee can be removed are because:
- They “materially violated or attempted to violate the terms of the trust and the violation or attempted violation results in a material financial loss to the trust.”
- They “fail[ed] to make an accounting that is required by law or by the terms of the trust.”
If the probate court agrees to remove the trustee and the grantor named an alternate, that person would take over. If there’s no alternate named, the probate court would name someone.
Before you take action to attempt to remove a trustee, it’s important to get trusted legal guidance to help build a solid case. If you believe money is being misappropriated or lost, it’s crucial to act as soon as possible.