San Francisco & Orinda Trust
Administration Attorney

Understanding the Rights of Beneficiaries

The grantor establishes the terms of the trust, and the trustee has responsibility to manage the trust in accordance with those terms. However, trust beneficiaries also have certain rights with respect to the trust.

The specific rights of trust beneficiaries will depend on the type of trust, the provisions of the trust document, and state law. In a revocable-type trust, beneficiaries typically have few or no rights. The grantor who established the trust retains the right to change the terms of the trust (including changing the beneficiaries of the trust) or to revoke the trust outright.

In irrevocable trusts, the grantor typically cannot change the terms of the trust after its formation. As a result, beneficiaries of irrevocable trusts may have significant rights that can include:

• The right to distributions of trust income and principal as set forth in the trust document.
• The right to be provided with information about the operation and performance of the trust so that they are able to enforce their rights under the trust.
• The right to an accounting, which is a report of income, expenses and distributions from the trust. Accountings are typically provided on an annual basis, although the frequency of accountings can be set by the terms of the trust. Beneficiaries are also entitled to waive the need for an accounting.
• The right to petition a court to remove the trustee if they can prove that the trustee has acted unlawfully, in violation of the terms of the trust, or in a manner that is contrary to the best interests of the trust and the beneficiaries.
• The right to petition the court to terminate the trust. However, courts will only grant termination of a trust when the purposes of the trust have been fulfilled or when the purposes of the trust have been frustrated.

Disputes During Trust Administration

Disputes can often arise during trust administration including the following :

• Challenging whether the grantor of the trust had the mental capacity to legally form a trust.
• Challenging whether the grantor formed the trust and intentionally included certain provisions in the trust document or whether the terms of the trust were due to someone else’s coercion, undue influence or fraud.
• Challenging whether the trust document was fraudulently created or forged.
• Alleging that actions taken by the trustee were contrary to the terms of the trust.
• Challenging the administration fees charged to the trust by the trustee.
• Alleging that the trustee dissipated or wasted trust assets due to mismanagement.
• Claiming that the creation or funding of the trust constituted a fraudulent conveyance designed to defraud creditors.

Ultimately, trust litigation may be necessary to resolve beneficiary or creditor disputes against the trust, or to allow a trustee to seek a determination from the court as to the obligations owed to the trust or to the beneficiaries.