Over the last few decades, trusts have become an increasingly popular addition to the average estate plan. In fact, trusts have evolved to the point where there is a specialized trust available to meet almost any estate planning goal – and if one is not already available you can use the trust terms to create one to meet your needs. Although there are now numerous different types of trusts available, all trusts share a few basic elements, including a Trustor, a Trustee, and at least one beneficiary. If you are the beneficiary of a trust you undoubtedly have questions regarding what it means to be a beneficiary and what beneficiary rights you have.
What Type of Trust Is Involved?
To determine whether you have any beneficiary rights, and if so what those rights are, you must first determine what type of trust is involved. Trusts are broadly divided first into testamentary and living trusts. A testamentary trust does not activate until the death of the Trustor (the person who created the trust). A living trust activates once all the necessary elements of creation are satisfied. Trusts are then further sub-divided into revocable and irrevocable trusts with the former being able to be modified or terminated by the Trustor of the trust at any time and for any reason. An irrevocable trust, on the other hand, cannot be modified or terminated by the Trustor for any reason. A testamentary trust is always a revocable trust because the Trustor can rework the trust up to the time of death. A living trust, however, can be revocable or irrevocable.
Are You a Current or Future Beneficiary?
After deciding which type of trust is involved you need to determine what status of beneficiary you are. A trust can include both current and future, or remainder, beneficiaries. While the Trustee of the trust must take into account the best interests of all beneficiaries, as a current beneficiary you will likely have more rights than a future beneficiary will have.
Rights as the Beneficiary of a Revocable Trust
As a beneficiary of a revocable trust you have relatively few rights because of the simple fact that you could be removed as a beneficiary entirely at any time. Remember, the Trustor of a revocable trust is free to change, modify, amend, or even terminate the trust at any time and without providing a reason. This means the Trustor can remove and/or add beneficiaries at any time. Nevertheless, while you are a beneficiary you have the right receive disbursements pursuant to the terms of the trust as well as the right to communicate with the Trustee about trust business.
Rights as the Beneficiary of an Irrevocable Trust
As the beneficiary of an irrevocable trust, you will typically have more rights than those that the beneficiary of a revocable trust may have as well as some that are unique to the beneficiary of an irrevocable trust. Your rights will likely include:
- Communications – you have a right to regular communication from the Trustee and the right to request information from the Trustee if needed.
- Disbursements – you have the right to disbursements from the trust fund as provided for in the trust terms.
- Accounting– an accounting should be prepared and provided to you at regular intervals – usually every year.
- Remove Trustee– as a beneficiary you have the right to petition a court to remove the Trustee is you believe the Trustee is not doing his/her job properly. Sometimes the power to remove a Trustee is even explicitly written in the trust agreement.
- Terminate trust– under certain conditions, even an irrevocable trust can be terminated; however, only a court can formally terminate the trust. As a beneficiary, however, you have the right to petition the court for termination.
To learn more about your rights as a beneficiary of a trust, contact the experienced Illinois estate planning attorneys at Nash, Nash, Bean & Ford, LLP by calling 309-944-2188 to schedule your appointment today.