Living Trust Beneficiaries Can Request an Accounting or Replace You

June 25, 2013 by · Leave a Comment 

Request an Accounting

For many unsatisfied or concerned living trust beneficiaries, their first step is to request a written accounting that shows how you have invested or spent trust assets.  You are required to provide this information, because of your legal duty to keep the beneficiaries reasonably informed about the trust.  So if you get a request for an accounting, comply with it promptly.

Replace You

Some trust documents give beneficiaries the power to remove a trustee and appoint someone else to take over. For example, surviving spouses generally have the right to remove and replace a trustee at any time, and for any reason, by giving the trustee a certain amount of written notice.  Thirty days is typical.

There are also trusts that allow a majority of beneficiaries toremove and replace a trustee.  In that case, the next named successor will serve as trustee, unless the trust also allows the adult beneficiaries to name a new trustee. Review the trust instrument and see whether it discusses how and when a trustee can be removed.  The beneficiaries may need to prove some kind of misconduct (such as bad faith or gross negligence, or they may have the authority to remove you for no reason at all.

TRUST PROTECTORS

Occasionally, but not very often, we find trusts that name a friend or family member as a “trust protector.”  This person can step in and replace the trustee with someone else, either someone named in the trust instrument or chosen by the trust protector.  You’re not likely to run into a trust protector because they are not that common for typical, revocable living trusts.  They are used more often when a trust can’t be revoked during the settlor’s lifetime, such as revocable life insurance trusts.

The trust instrument will state in detail the trust protector’s authority, which typically includes the independent power to:

  • remove a trustee if the protector decides the trustee isn’t doing a god job for the trust’s beneficiaries
  • replace the trustee with someone the protector chooses and
  • receive an annual accounting from the trustee
This are the procedures that do not require outside intervention from a court of law, which I will cover in my next blog.

About Dean McAdams
Dean McAdams is not an attorney or law firm and does not provide legal advice or set fees for legal services. If you need legal advice please contact a licensed attorney.

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