Rights of the Beneficiary of an Irrevocable Family Trust

By Jennifer Kiesewetter, J.D.

Rights of the Beneficiary of an Irrevocable Family Trust

By Jennifer Kiesewetter, J.D.

Many people may think that a designated person govern all aspects of trusts. As a beneficiary of this type of arrangement, though, you have specific rights under state estate planning laws.

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A trust is a legal document where the grantor transfers assets to a trustee, which is the person or entity that acts as the manager of the assets. This person or entity has legal title to the assets for someone else, also known as the beneficiary.

An Irrevocable Family Trust

This is a legal arrangement where the grantor transfers legal ownership of the assets. The trustee manages the assets on behalf of the recipient. For example, this includes investing assets, paying taxes on specific assets, and creating written records. For family trusts, the beneficiary is a relative of the grantor.

Most are revocable unless the arrangement states otherwise. With this, the grantor can modify the terms, terminate it altogether, or even change beneficiaries. An irrevocable trust cannot be changed or terminated unless by court order. However, beneficiaries have greater rights here since the recipient designations cannot typically be altered.

The Rights of the Beneficiary

Beneficiaries have more rights, including payment, information, and an accounting of assets. Under specific circumstances, recipients may remove the trustee or terminate the arrangement.

Right to Payment

Beneficiaries have the right to payment or distributions. However, for such distributions to be legal, the payments must follow the specific terms of the legal document and not waiver from those terms.

Request of Information

Beneficiaries also have a right to information. For example, they should understand what the trust provides, such as educational expenses, and how it's administered. In other words, recipients must understand how the trust works so that they can enforce their rights.

Right to an Accounting

Beneficiaries have a right to an accounting of assets. This includes a report of all specific transactions, such as income, distributions, and expenses or fees. For example, if the arrangement holds a house as an asset, the accounting includes mortgage payments, tax payments, and maintenance and upkeep expenses.

Typically, under most state laws, trustees must provide an annual accounting to the beneficiaries. However, depending on the language in the document, along with state laws, the beneficiary may request a special accounting outside of the annual report. Additionally, recipients may elect out of receiving an accounting entirely.

Ability to Remove the Trustee

Under specific circumstances, this person can be removed from their duties. To do so, they must petition the court for the removal. This can be done if they believe that the individual is not properly managing the trust in the best interest of the recipients.

Option to End the Trust

Additionally, a beneficiary may terminate it, with the court's permission. If all of them agree to end it, then they can petition the court for the trust's termination. For example, if the trustee fulfills the legal document's purpose, such as providing college tuition, then the court may grant the termination request.

If beneficiaries want to enforce their rights under an irrevocable family trust, they may do so. However, to do it successfully, they must understand the details of their state law with regard to estate planning.

This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not LegalZoom, and have not been evaluated by LegalZoom for accuracy, completeness, or changes in the law.