Living trust beneficiaries have certain rights that are designed to help protect their interests with regard to the trust at hand. The type of living trust (revocable or irrevocable) and the type of beneficiary involved determines which rights apply.
Revocable or Irrevocable Living Trust
A living trust can be either revocable or irrevocable. When a trust is revocable, the settlor who creates the trust can change it or terminate it any time he or she chooses, and the beneficiaries of the trust can be changed as well. Therefore, beneficiaries of revocable trusts have very few rights. When the trust is irrevocable, however, the trust cannot be changed or terminated by the trustor for any reason except by court order in rare cases.
In many cases, a living trust will include both current and remainder beneficiaries. While current beneficiaries are those who are entitled to current compensation from the trust, remainder beneficiaries only have an interest in a living trust once the current beneficiary’s interest is depleted. Current beneficiaries typically have more rights than remainder beneficiaries.
Rights of Revocable Trust Beneficiaries
Because the trustor of a revocable trust can modify, amend or terminate a living trust at any time and for any reason, and he or she can add or remove beneficiaries at will, the rights of revocable trust beneficiaries are few. However, revocable trust beneficiaries do have the right to collect distributions of the trust as set forth in the terms, and they have the right to communicate with the trustee regarding the business of the trust.
Rights of Irrevocable Trust Beneficiaries
In addition to state law, the specific terms of an irrevocable trust determine what rights are available to beneficiaries. Rights typically include:
- Communication and Information: The beneficiary has the right to communicate with the trustee and to obtain information relevant to the trust as needed.
- Payments: As provided for in the specific terms of the trust, the beneficiary has the right to receive distributions from the trust.
- Accounting Report: A current beneficiary has the right to receive an accounting report regularly. The report will provide details about income, expenses and distributions.
- Trustee Removal: Both current and remainder beneficiaries have the right to request that the trustee be removed if it is believed that the trustee is not acting in the best interests of the trust.