California law imposes a number of requirements for creating and handling a living trust. A living trust allows a person to transfer property to an intangible entity for the benefit of one or more persons. The person in charge of distributing the trust property is called the trustee. The trustee is responsible to the trust beneficiaries regarding the trust, and must comply with California’s rules when dealing with the trust. Included in this set of rules is the duty to provide the trust beneficiaries with an accounting.
Notifying the Trust Beneficiaries
As part of the accounting process, the trustee must notify the trust beneficiaries about important information regarding the trust upon the death of the person or persons who created the trust. The notice must identify the persons who created the trust, provide the date when the trust was created, provide the trustee’s name, mailing address and telephone number, identify the location where the trustee will handle the trust, such as the trustee’s business address, and any additional information the trust document requires for the notice. The trustee must also notify the beneficiaries that they have a right to receive a copy of the trust document if they request one. The trustee must either personally deliver a copy of the notice to the beneficiaries or mail the notice to them. If the trustee does not provide the required notice, the beneficiaries can sue the trustee.
The trustee must usually provide an accounting to the beneficiaries at least one time every year. Circumstances may require more frequent notices, however, such as if a new trustee takes over. The trustee must deliver one final accounting notice after all of the instructions within the trust have been carried out. An accounting is not required if the trust beneficiaries waive their right to receive a periodic accounting, or if the trust document expressly states that the trustee is not required to provide accounting. A beneficiary who waives her right to receive an accounting is free to change her mind at any time.
Contents of Accounting
An accounting must satisfy a number of legal requirements. The accounting must notify the beneficiaries of any expenses incurred by the trust and any property distributed by the trustee. The notice must also inform the beneficiaries about the extent of the property still held in trust, and the nature of any obligations the trustee is required to pay. If the trustee received compensation for acting as the trustee, the accounting must also include this. If the trustee hired someone to help with the trust, such as an attorney or accountant, the accounting must provide the beneficiaries with the names of those persons and how much money the trustee has paid them from the trust funds. Each accounting must include language informing the beneficiaries that they have the right to ask a court to review the accountings. Finally, the accounting must inform the beneficiaries that they have only three years to sue the trustee if they think the trustee is acting improperly.
Limited Time to Challenge Trust
If a trust beneficiary wants to challenge the legal sufficiency of a trust in court, the beneficiary has only a limited time to do so. A beneficiary has only 120 days after receiving the notice from the trustee about the trust. If the beneficiary received a copy of the trust document from the trustee, the beneficiary has only 60 days from the day when the trustee mailed or personally delivered the copy to the trustee.