If you are the beneficiary of a living trust, you may have a lot of questions. First and foremost would be what rights do you have to the assets within the trust? Do you have any control of the assets and can you potentially borrow money against it? The best way to understand your rights as a beneficiary is to understand what living trusts are used for.
What Is a Living Trust?
A living trust is a trust that the grantor creates in his or her lifetime. He or she will put assets or property into the trust and then appoint a trustee to handle the assets for the beneficiaries. As a beneficiary, you do not generally have any control over the trust. This is left up to the trustee to handle and to remain strict with the regulations and guidelines set down by the grantor.
Trustees have to collect the assets for the trust and protect those assets. In addition, if there are any investments, he or she needs to have authority over them and ensure that every decision may benefit the interests of the beneficiary. The trustee should have extensive records of all financial decisions and transactions.
What Are Your Rights?
As the beneficiary, you have the right to request financial information from the trustee if you think that the trustee is not upholding his or her fiduciary duties. If he or she is in violation of his or her responsibilities, then you can act against the trustee. You would file against the trustee in probate court.
Now, the grantor is who establishes the rules and detailed instruction for how the assets in the trust are handled. Revocable trusts include assets that the grantor can revoke at any time, whereas irrevocable trusts have assets that are permanently removed from the grantor. Now, you can begin receiving assets and wealth while the grantor is still alive.
In a living trust, you cannot borrow against the trust. The grantor can remove property to borrow against and then return the property afterwards. In an irrevocable trust, beneficiaries cannot borrow money. The trust has its own terms when it comes to distributions that you have to follow.
If you are a beneficiary of a trust, then it can be confusing to understand your rights. After all, you are not the one who put together the trust. To find out more about your rights as a beneficiary, set up a consultation with a living trust lawyer in Sacramento, CA.
Thanks to the Yee Law Group for their insight into estate planning and trust beneficiaries.
