10 Things California Trust Beneficiaries Must Know (2023)

October 28th, 2022 in Trusts

10 things California trust beneficiaries must know. If you are a trust beneficiary in California, you are the only person who can protect your rights under the trust. Here are 10 things you must know to protect your rights as the beneficiary.

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Know Your Trust

Read your trust as many times as you need to thoroughly understand it. If you do not understand the trust, consult with an attorney. The trust is what determines your rights and what you are entitled to receive.

Know What You Are Entitled To

Understand what you are entitled to and when you are to receive your distribution. Not all beneficial interests are the same. Are you entitled to income, principle or both? Are you the beneficiary of a specific gift or a residual beneficiary?

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Ask for Information in Writing

As a beneficiary you are entitled to information regarding the trust assets and the status of the trust administration from the trustee. You are entitled to bank statements, receipts, invoices and any other information related to the trust. Be sure to ask for information in writing. It does not have to be sent via certified mail but it should be in writing such as a letter or email. Be sure to keep a copy for your file of each and every request and any responses you receive.

Request an Accounting

Not all beneficiaries are entitled to an accounting. The income and principle beneficiaries are entitled to an accounting. If you are entitled to an accounting, ask for an accounting from the trustee after 6 months. The request should be in writing.

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Know Your Tax Consequences

If you have questions about the tax consequences of your inheritance, seek the advice of a professional.

The Trust Is Being Administered On Your Behalf

You may feel as a beneficiary you have no rights. The trustee is in charge and as a beneficiary you have no control. This is a common misconception. The trustee is administering the trust on your behalf. If you disagree with anything the trustee does or does not do, they must ultimately to you and the trustee cannot treat you with hostility. As a beneficiary you can hold the trustee responsible for any damages the trustee causes to the trust. The trustee ultimately answers to you.

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You Can Question the Trustee

Some trustees believe the beneficiary should not question their actions or ask for the status of a trust administration. This is absolutely not true. You are entitled to be kept abreast of the status of the trust administration as well as ask the trustee questions. The trustee has a duty to respond within a reasonable amount of time. If you are dealing with a trustee who is not cooperating with you or providing you with any information, it may be time to seek legal representation.

You Can Remove the Trustee

If the trustee is not properly performing his duties, you can request the court remove the trustee. This is not a trust contest as you are not contesting the trust document. You are merely contesting the actions of the trustee. As a beneficiary, you are entitled to a trustee who performs his or her duties in a reasonable amount of time, protects the trust assets for your benefit and treats you with respect. The trustee is required to put your interests and the trusts before the trustee’s interest.

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You Are Entitled to Review the Trust Records

As a beneficiary, you are entitled to review the trust’s records including bank statements, the checking account ledger, receipts, invoices, etc. Before the trust administration is complete, it is recommended you request and review the trust’s records which support the accounting. If you have any questions about any of the documents, you are entitled to receive answers.

You Have A Right to End the Trust Administration

If the trustee is taking too long to do administer the trust, as a beneficiary you can petition the court for the trustee to send the final accounting and to end the trust administration. The trust administration should take some time but a simple trust administration should not go on for years and years.

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What are the rights of a beneficiary of a trust in California? ›

As a beneficiary you are entitled to information regarding the trust assets and the status of the trust administration from the trustee. You are entitled to bank statements, receipts, invoices and any other information related to the trust. Be sure to ask for information in writing.

What information are beneficiaries entitled to? ›

A beneficiary's right to information

Generally speaking, beneficiaries have a right to see trust documents which set out the terms of the trusts, the identity of the trustees and the assets within the trust as well as the trust deed, any deeds of appointment/retirement and trust accounts.

What rights do beneficiaries have over the trust assets? ›

Individual beneficiaries have no rights to assets until the trustees exercise a discretion in their favour. Consequently, an obligation for trustees to act impartially while managing trust assets for the benefit of all beneficiaries is reasonable and appropriate.

Who holds the real power in a trust the trustee or the beneficiary? ›

Yes, a trustee can override a beneficiary if the beneficiary requests something that is not permitted under the law or by the terms of the trust. Under California Probate Code §16000, trustees must administer the trust according to the terms of the trust instrument.

Can beneficiaries demand to see bank statements? ›

Some times beneficiaries want to see more detailed documents such as a Deceased's bank statement or pension documentation. Strictly speaking a beneficiary has no entitlement as of right to such documentation and it is your discretion as Executor whether or not to disclose it.

Does a beneficiary have right to see financial statements? ›

Obtain Financial Information

Trust beneficiaries are entitled to receive communication and financial information about the Trust assets upon reasonable request to the Trustee.

Should an executor keep beneficiaries informed? ›

Executors generally serve as a beneficiary's only conduit of information. As a result, executors have a responsibility to keep beneficiaries reasonably informed about the estate and administration.

Does an executor have to show accounting to beneficiaries? ›

The short answer is yes, you have to show an accounting unless the heirs or beneficiaries of the estate waive the requirement. And even if they waive it, probate best practice is to show a thorough summary of what was done so you reduce the chance of disputes later on.

How long does a trustee have to notify beneficiaries in California? ›

A notice regarding the trust and the beginning of the trust administration period must be sent to all of the people named as beneficiaries of the trust. These notices must be sent out within 60 days of the date of the death that caused the change in the trust or initiated the trust administration period.

What are trustees obligations to beneficiaries? ›

A Trustee owes a duty of honesty, integrity, loyalty and good faith to the beneficiaries of the trust. A trustee must at all times act exclusively in the best interests of the trust and be actively involved in any decisions.

Can a beneficiary challenge a trustee? ›

In most instances, it is the beneficiary who makes the decision to take action against a trust or trustee. Nevertheless, it is also possible for any other party to file a claim, if they believe they have just cause to do so.

How does beneficiary get money out of trust? ›

Distribute trust assets outright

The grantor can opt to have the beneficiaries receive trust property directly without any restrictions. The trustee can write the beneficiary a check, give them cash, and transfer real estate by drawing up a new deed or selling the house and giving them the proceeds.

Does a beneficiary have any rights? ›

Do beneficiaries have the right to inherit? If you are a named beneficiary in a will to receive a legacy (e.g. a sum of money) or a share of the 'residuary estate' (e.g. half of the value of the estate after everything else has been paid out) then you are entitled to receive that money.

Who is the ultimate owner of a trust? ›

Generally speaking, a trust involves the legal ownership of the property by the trustee for the benefit of the trust's beneficiaries. With a discretionary trust no individual person owns the benefit of the assets as it is up to the trustee to decide who receives income or capital distributions from the trust.

Who controls the money in a trust? ›

Trust funds are set up by the grantor and managed by the trustee until the time comes for the beneficiary to receive the payout or other assets.

Can an executor hide money from a beneficiary? ›

Executors can withhold monies from beneficiaries, though not arbitrarily. Beneficiaries may be unable or unwilling to receive a gift by a will. The executor's job is onerous and the time taken to execute a will may vary greatly.

Who holds the account in beneficiary bank? ›

Beneficiary Bank Account means the account of the Beneficiary where you wish to send money, be it a bank account, electronic money account or otherwise.

How does a beneficiary get money from a bank account? ›

After your death, the beneficiary has a right to collect any money remaining in your account. They simply need to go to the bank with proper identification and a certified copy of the death certificate.

What is the trust law code in California? ›

Under California law, a trust may be created for any purpose that is not illegal or against public policy. A trust created for an indefinite or general purpose is not invalid for that reason if it can be determined with reasonable certainty that a particular use of the trust property comes within that purpose.

Does an executor have to show accounting to beneficiaries in California? ›

Estate Executors Must Provide Beneficiaries With Proper Accounting. Under California law, executors of a will must file an accounting of all of the transactions they have conducted while administering the estate. The executor must file this accounting with the probate court.

Does a beneficiary have to share with siblings? ›

The law doesn't require estate beneficiaries to share their inheritance with siblings or other family members. This means that if a beneficiary receives the entire estate, then they are legally allowed to keep it all for themselves without having to distribute any of it amongst their siblings.

How much should an executor of a trust be paid in California? ›

Understanding executor pay in California

According to the California Probate Code section 10800, the executor receives a percentage of the estate. For example, the executor is entitled to 4% of the first $100,000 of the estate, then 3% of the next $100,000, and 2% of the next $800,000.

How long does an executor have to settle an estate in California? ›

California law says the personal representative must complete probate within one year from the date of appointment, unless s/he files a federal estate tax. In this case, the personal representative can have 18 months to complete probate.

What does an administrator have to disclose to beneficiaries? ›

The key responsibility an executor has when it comes to beneficiaries is to notify everyone who has an interest in the estate, and let them know what, if anything, is set out for them in the will. Beneficiaries are essentially entitled to make sure that the estate is being administered properly according to the will.

What records should an executor keep? ›

Final accounts

receipts showing debts paid, for example utilities bills. receipts for your expenses from dealing with the estate. written confirmation that 'beneficiaries' (anyone who inherited) received their share of the estate.

What if an executor does not notify a beneficiary? ›

Should the Executor continue to not engage or provide the information required then it may be the case that removal of the Executor needs to be sought as a remedy at Court. These types of applications can be challenging and the Court will not remove an Executor without serious concerns as to their abilities.

How does executor pay beneficiaries? ›

How does an Executor distribute money to Beneficiaries? Once the Grant of Probate has been issued, Executors can distribute the estate following the instructions left in the Will. Before anything can be distributed the Executor must settle any outstanding debts.

What a trustee Cannot do in California? ›

The trustee is prohibited from using his/her power for an advantage to the detriment of the beneficiaries. Duty to Avoid Conflicts of Interest A trustee's duty to avoid conflicts of interest helps ensure that the trustee does not breach the duty of loyalty.

How long does it take to settle an estate with a trust in California? ›

Though it varies from case to case, depending on the make-up of the trust assets, how all of the assets were vested and the type of revocable trust, it's typical for a trust administration to take about a year or little longer.

What percentage does a trustee get paid in California? ›

For the most part, corporate trustees are compensated through a percentage of the trust's assets, typically between 1% and 2% per year. In other words, if a trust has $2 million in assets, a corporate trustee would receive annual fees between $20,000 and $40,000.

What are the three duties of a trustee? ›

His or her three primary jobs include investment, administration, and distribution. A trustee is personally liable for a breach of his or her fiduciary duties. The trustee's fiduciary duties include a duty of loyalty, a duty of prudence, and subsidiary duties.

What are the responsibilities of a beneficiary? ›

Your primary job as a beneficiary is simply to receive the assets that were given to you in your loved one's will. These assets will be passed down by the administer of your loved one's estate. Beneficiaries may also acquire a trust from a deceased individual.

What can trustees not do? ›

A trustee must not place himself or herself in a position in which his or her duties as a trustee conflicts with his or her private interests. The trustees can only act within the terms of the trust deed. If they act outside those powers they are said to be in breach of trust.

Can trustees remove a beneficiary? ›

In the case of a discretionary trust there are two strategies for excluding a beneficiary from any benefits from the trust. In the first instance the trustees can simply decide not to let the beneficiary concerned draw any benefit, in other words the trustees may decide to whom they want to make allotments or not.

How is a trustee held accountable? ›

Trustees must follow the terms of the trust and are accountable to the beneficiaries for their actions. They may be held personally liable if they: Are found to be self-dealing, or using trust assets for their own benefit. Cause damage to a third party to the same extent as if the property was their own.

What is the 65 day rule for trusts? ›

What is the 65-Day Rule for estates and trusts? Any distribution by an estate or trust within the first 65 days of the tax year can be treated as having been made on the last day of the preceding tax year. This year, that date is March 6, 2023.

Do trust beneficiaries pay taxes? ›

Trust beneficiaries must pay taxes on income and other distributions that they receive from the trust. Trust beneficiaries don't have to pay taxes on returned principal from the trust's assets. IRS forms K-1 and 1041 are required for filing tax returns that receive trust disbursements.

Do you have to pay taxes on money inherited from a trust? ›

So when the assets have successfully been transferred into trust, they're no longer subject to Inheritance Tax on your death. Others pay income and capital gains tax at higher rates. So it's important to know what type of trust you have. The kind of trust you choose depends on what you want it to do.

What overrides a beneficiary? ›

The Will will also name beneficiaries who are to receive assets. An executor can override the wishes of these beneficiaries due to their legal duty. However, the beneficiary of a Will is very different than an individual named in a beneficiary designation of an asset held by a financial company.

What are the cons of being a beneficiary? ›

Cons To Using Beneficiary Deed
  • Estate taxes. Property transferred may be taxed.
  • No asset protection. The beneficiary receives the property without protection from creditors, divorces, and lawsuits.
  • Medicaid eligibility. ...
  • No automatic transfer. ...
  • Incapacity not addressed. ...
  • Problems with beneficiaries.

How long do beneficiaries have to contest a trust in California? ›

Contesting Trusts

The deadline to contest a trust is 120 days from the date the notice under Probate Code 16061.7 is mailed. This notice provides specific, required information to be provided to the heirs at law and beneficiaries of the trust.

How long does it take to settle a trust after death in California? ›

How Long Does It Take to Settle a Revocable Trust After Someone Dies in California? Though it varies from case to case, depending on the make-up of the trust assets, how all of the assets were vested and the type of revocable trust, it's typical for a trust administration to take about a year or little longer.

What responsibilities does a trustee have to beneficiaries? ›

A trustee has a fiduciary duty to act in the best interests of both current and future beneficiaries of the trust and can be held personally liable for any breach of that duty.

Can a trustee ignore a beneficiary? ›

Yes, a trustee can refuse to pay a beneficiary if the trust allows them to do so. Whether a trustee can refuse to pay a beneficiary depends on how the trust document is written. Trustees are legally obligated to comply with the terms of the trust when distributing assets.

What is the success rate of contesting a trust in California? ›

Therefore, it's not all that surprising that in California less than one-third of contested trust cases succeed at trial; most will fail.


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