When a person dies with a revocable trust, the successor trustee has certain responsibilities that must be promptly performed. Unfortunately, it is not uncommon for the trustee to drag his feet, leaving the beneficiaries wondering what their options are.
The responsibilities that will come most immediately to the beneficiaries’ attention are the duty to keep the beneficiaries fully informed and the duty to distribute the trust assets to the beneficiaries in a timely manner. If the beneficiaries are not kept fully informed or are not receiving the assets in a timely manner, they should press the trustee for answers and action.
Keep the Beneficiaries Informed
The trustee has a duty to keep the beneficiaries fully informed regarding the operations of the trust. The trustee must send a notice to the trust beneficiaries within 60 days after the death of the settlor (the creator of the revocable trust) informing the beneficiaries of the existence of the trust. A copy of the trust instrument should accompany this notice. The trustee should provide the beneficiaries with an itemized list of the trust assets and their values, as well as trust liabilities, as soon as the trustee is able to ascertain them. As the administration of the trust proceeds, the trustee should keep the beneficiaries informed regarding trust income and expenses and any other substantial matters affecting the trust. In addition, the trustee should notify the beneficiaries before the trustee takes any significant action with regard to the trust, in order to give the beneficiaries an opportunity to register objections with the trustee before the action is taken.
There is no clear answer as to how long is a reasonable time to administer a revocable trust after the death of the settlor. It will vary depending on the composition of the trust assets and the complexity of the issues involved. As long as the beneficiaries are kept fully informed, as described above, they should have a good idea as to whether or not the trustee is moving steadily toward distribution. In most cases, a trustee should probably begin distributing assets to the beneficiaries within a year after death. If this does not occur, and if the beneficiaries do not have a good understanding as to why it is not happening, the beneficiaries should consider asserting their rights.
If a trustee is not keeping the beneficiaries fully informed or is refusing to distribute the trust assets without justification, the beneficiaries should demand that the trustee perform his fiduciary duties. If such demands are not successful, the beneficiaries can file a petition in probate court requesting that the court order the trustee to perform. In addition, a beneficiary may ask the court to impose a variety of sanctions, including removal of the trustee, awarding monetary damages, denial of the trustee’s compensation, and the setting aside of certain transactions that the trustee may have entered into improperly.
Of course, the trustee has many responsibilities beyond those discussed above, including the duty to prudently invest trust assets, the duty to file tax returns, the duty to keep trust property segregated from his own property and the duty not to engage in self-dealing. For a more detailed discussion of trustee responsibilities, see Serving as Trustee on this website.
Rust Tippett is the author of this blog post.
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This blog post in no way creates an attorney-client relationship between the reader and either Robert S. (Rust) Tippett or Bennett Tueller Johnson & Deere, LLC. The reader should consult with his or her own estate planning attorney regarding his or her particular circumstances.