trust beneficiaries have rights

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TRUST BENEFICIARIES HAVE RIGHTS


A beneficiary is a person who receives monetary gain or the benefit from

something, such as a trust, will, or life insurance policy.


When a trust involved, beneficiaries typically have rights which ensure the trust is properly

managed for their benefit.


WHAT IS A TRUST?


Trusts are agreements based between the trustee or trust asset manager and the grantor, who is the

person making the trust.


The trust agreement authorizes the trustee to administer the trust

assets and distribute them to the beneficiaries named in the trust,

according to the terms of the trust document.


THE PRIMARY BENEFITS OF A TRUST


Like a last will and testament, a trust can provide a way for you to determine now how and when your property will be distributed to the people

whom you chose upon your death.


A trust can also give you a way to protect and distribute assets in

situations where a particular beneficiary may need special assistance in managing that

property.


Another advantage is that a trust can help you avoid the time and expense of the probate process.


HOW AN IRREVOCABLE TRUST IS DIFFERENT FROM A REVOCABLE TRUST


By definition, an irrevocable trust is different because it cannot be modified after

it has been executed.


Nevertheless, there are very favorable tax consequences

inherent in irrevocable trusts.


For example, transferring assets to an irrevocable trust, may protect them from the reach of creditors,

estate taxes, and probate proceedings.


While you lose some control of your assets funded in an irrevocable trust, you gain other benefits.


TAX ADVANTAGES FOR A TRUST BENEFICIARY


Certain types of trusts can provide tax advantages for both the grantor

and the beneficiary.


These particular types of trusts include "credit shelter" trusts or

"life insurance" trusts.


There are also types of trusts that can be used to protect property

from creditors, as well as, to preserve the grantor’s eligibility for

Medicaid.


TYPES OF BENEFICIARIES


If you happen to be the beneficiary of an irrevocable trust, then you

have a right to certain information about the trust and the right to take

steps to ensure the trustee is properly fulfilling his or her duties.


The extent of these rights will depend on the terms of the trust

agreement, the law of the state the trust is created in, and on the type

of beneficiary you are: either current or remainder.


CURRENT BENEFICIARIES


Current beneficiaries are those who are presently entitled to income or

principal from a trust.


On the other hand, remainder (or contingent) beneficiaries only have

an interest in the trust once the current beneficiaries' interest has

ended.


For instance, one spouse may establish a trust that leaves income

to the other spouse for life.


The spouse beneficiary would be considered the current beneficiary. The remainder of the property may then be left to the children, who are

considered the remainder beneficiaries.


BASIC RIGHTS OF A CURRENT TRUST BENEFICIARY


The specific rights that a beneficiary may have are determined by the terms of the trust document,

as well as the trust laws in your state.


Current beneficiaries have the right to payment of distributions as set

out in the trust document.


They also have a right to receive sufficient information about the

trust and its administration to be able to enforce their rights.


Current beneficiaries have a right to an accounting, which is a detailed

report of all income, expenses, and distributions from the trust.


In most cases, trustees are required to provide an annual accounting

depending on the terms of the trust. Beneficiaries may also be able to

waive the accounting.


RIGHTS SHARED BY CURRENT AND REMAINDER BENEFICIARIES


Current and remainder beneficiaries have a right to petition the court for the removal of the trustee if there is a concern that the trustee is not acting

in the best interest of the beneficiaries.


Although it can be difficult, trustees are obligated to balance the needs

of the current beneficiaries with the needs of the remainder

beneficiaries.


Also, when all current and remainder beneficiaries agree, a

petition can be filed with the court to terminate the trust in certain

situations.


The trust laws in each state may vary on this issue. Typically, when the purpose of the trust has been fulfilled, or is impossible to fulfill,

the trust can be terminated.


CONTACT US!


If you have questions regarding the rights of a trust beneficiary, or any other estate planning needs, please contact The Vermillion Law Firm,

LLC for a consultation either online or by calling us toll free at

(888) 567-5745.


(972)386-4560 www.VermillionLawFirm.com

The Vermillion Law Firm, LLC