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The Difference Between A Trustee And A Beneficiary

 

The Difference Between A Trustee And A Beneficiary

Trust administration involves ensuring that the final wishes of a deceased person are upheld. When they are two separate people, the difference between a trustee and a beneficiary is clear.

Probate Topics, Probate Litigation 

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The Difference Between A Trustee And A Beneficiary

Trust administration involves ensuring that the final wishes of a deceased person are upheld. When they are two separate people, the difference between a trustee and a beneficiary is clear. The trustee is someone usually chosen by the deceased to be responsible for managing and disbursing the Trust. The beneficiary is the person who inherits assets from the Trust. Each role has its responsibilities.

What is a Trustee

The trustee is responsible for managing and administering a trust. An irrevocable trust is one that exists following the death of the trustor. The trustee’s responsibilities begin immediately with notification to the beneficiaries that they are due to inherit and will continue until you disburse the funds and close the Trust. Trustee responsibilities include reporting trust accounting to the courts and keeping clear communications open to the beneficiaries at all times.  

Beneficiary

The beneficiary is the person who is inheriting from the Trust. Once the beneficiary receives notice that they are inheriting, they have 120 days to file a contest against the Trust should they believe that either the Trust itself is invalid or another beneficiary has had undue influence on the trust document. 

Who Has More Right A Trustee Or The Beneficiary? 

 When it comes to the administration of a trust, both the trustee and the beneficiaries have rights and responsibilities. The relationship between the two parties will work best when there is open and honest communication between them. The process itself focuses on one singular thing: to ensure that the decedent’s final wishes are fulfilled. 

Trustee Rights And Responsibilities 

 A trustee’s rights and responsibilities are to attain a legal and timely distribution of assets as directed by the trust documentation.  

During this time, the trustee has:  

  • The right to decide how assets are appraised and liquidated.
  • The right to choose which professionals to consult.
  • The right to compensation by the Trust for the significant time and effort trust administration duties require.
  • The right to question discrepancies they may find within the document itself
  • The responsibility to report accounting to the courts as required by California law.
  • The obligation to disburse funds to the beneficiaries in a timely manner.

Beneficiary Rights and Responsibilities

The beneficiaries have:

  • The right to receive a true copy of the Trust, its amendments, and related written instructions and notes. 
  • The right to contest a trust in a timely fashion as set forth by the laws.
  • The right to receive consistent and timely updates.
  • The right to receive their inheritance in a timely manner.

Which Party Has More Rights?

To discover who has more rights, a trustee or the beneficiary, we look at both the trustee and the beneficiary’s rights and responsibilities. The trustee appears to have more rights than the beneficiary. Even though the trustee’s actions are tightly controlled, they do have choices about the appraisal of assets, selecting when and if supporting counsel needs to be brought in to consult during the administration process. 

Can A Beneficiary Be A Trustee?

It is not uncommon for a beneficiary to also be the designated trustee of an estate. When a trustor is in the estate planning stage, they can take the time to select the person who they believe will best carry out their final wishes. In smaller estates, especially, the trustor is likely to choose a close and trusted friend or relative. Trusts are usually set when the trustor does not want their families to go through the probate process. If you are considering naming a beneficiary as your trustee, you will want to consider all sides. If the estate is simple, beneficiaries few, and all beneficiaries get along well, then naming a beneficiary as a trustee is a valid option.

Potential Problems

Not everyone considers the issues that asking can a beneficiary be a trustee might bring. When you are both a trustee and beneficiary, you need to remember that your trustee responsibilities are the same as if you were not in a dual role. If there is more than one beneficiary, there is also a risk that there may appear to be a conflict of interest. If an estate is small, and there are only one or very few beneficiaries, there is less possibility of disputes.  

Beneficiary vs. Trustee

Problems can arise between trustee and beneficiary if the beneficiary suspects that the trustee is in breach of fiduciary duty. A contest under this reasoning is possible if the trustee is viewed as unfairly showing preference to one beneficiary over another or if the trustee has misappropriated funds from the estate in any way. Although rare, there are also situations where a trustee can have a beneficiary removed from the Trust. Any beneficiary vs. trustee situations that cause concern can become a problem due to a potential contest to the Trust. 

Consult A Trust Attorney

If you are a trustee in need of guidance or a beneficiary in need of advice, consult a trust attorney today to get all your questions answered.

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