10th Aug 2013
In a revocable living trust there are two groups of people. The trustees who administer the trust, and the beneficiaries who receive all or part of the trust estate upon distribution.
Often the successor trustees and beneficiaries are the same persons, or there is some overlap between them. For example, one of the three children may be named as sole successor trustee in the trust, but the 3 children are equal beneficiaries.
Clients and family members who fail to discern the difference between trustees and beneficiaries will sometimes interpret the trust to mean that the sole trustee is the sole beneficiary. This results in anger and hostility in the family.
Tragically, a successor trustee who is unsophisticated, and has not engaged legal counsel to help him or her, may interpret the trust to mean that he or she gets all of the estate, or that as trustee they are now the “boss” of the family and use the trust as weapon against the other siblings and family by delaying distribution, refusing to give an accounting, and failing to keep the beneficiaries informed.
Beneficiaries often do not understand that they have rights, and the trustee is not the boss of the family. Beneficiaries can legally sue the trustee for breach of fiduciary duty and failure to give an accounting, required by California law.
This is why the selection of the successor trustee is so critical to the success of the trust in carrying out the intent of the trust’s creators.
Understanding the roles of the successor trustee and the beneficiaries is critical to all the parties to the trust, and will help alleviate suspicions between family and abuse of power by the trustee.
Having an experienced living trust lawyer to not only create the trust, but to help with trust administration is essential to the trust and the family.
Dwight Edward Tompkins,
Living Trust Lawyer