Can a Trustee Also Be a Beneficiary?

The short answer is yes, a trustee can also be a trust beneficiary. One of the most common types of trust is the revocable living trust, which states the person’s wishes for how their assets should be distributed after they die. Many people use living trusts to guide the inheritance process and avoid probate. In many family trusts, the trustee is often also a beneficiary.

Can a trustee also be a beneficiary?

Yes, a trustee can also be a beneficiary of a trust.

It’s fairly common for a trust beneficiary to also serve as trustee. For example, in a family trust created by two spouses, the surviving spouse will almost always serve as both a trustee and beneficiary. It’s also common practice for one adult child to serve as the trustee of a trust after the parents pass even if there are other kids.

 

 

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What is a trustee?

A trustee is the person or entity responsible for managing and distributing trust assets. Trustees have a fiduciary duty to make responsible decisions and act in the best interest of the trust and its beneficiaries. Generally, a trustee must ensure that the trust assets are distributed as the trust creators intended.

What is a beneficiary?

A trust beneficiary is a person who is named in the trust and entitled to receive a part of the trust assets. Depending on the terms of the trust, a beneficiary may receive their inheritance at the time the creators pass, or the assets may remain in trust for a specified amount of time. 

Can a trustee take salary from a trust?

Yes, trustees are legally entitled to receive “reasonable compensation” for their services, unless the trust explicitly states otherwise.

Generally, the creators of a trust will make clear in the trust document how a trustee should be compensated. Under California Probate Code §15680, a trustee is legally entitled to receive payment as detailed in the trust instrument. The trust document may provide for the trustee to receive a certain percentage of the value of trust assets, an hourly rate or a flat fee. 

However, when the trust document does not dictate the trustee fee, California Probate Code §15681  fills in to say that a trustee is entitled to receive reasonable compensation under the circumstances. 

Can a trustee take assets from a trust?

No, in most instances trustees cannot take assets from a trust. This is often referred to as embezzlement, sometimes self-dealing, but more simply is nothing more than stealing.

A trustee can only use trust assets to benefit the trust beneficiaries. Trustees must abide by the terms established by the trust creators and cannot take assets for personal use.

Due to the fiduciary relationship trustees have with beneficiaries, trustees have a legal obligation to act in the trust beneficiaries’ best interests. It prohibits a trustee from using trust assets to primarily benefit themselves or third parties who are not beneficiaries. 

Self-dealing occurs when a trustee uses trust assets to capture a benefit for themselves instead of the trust beneficiaries. This means that trustees cannot use trust assets in transactions that benefit themselves to the beneficiaries’ detriment. When it comes to managing the trust, a trustee must prioritize the beneficiaries’ interests above their own personal interests at all times. 

For example, unless the trust document permits it or a trustee obtains special approvals, trustees cannot:

  • Sell trust assets to themselves
  • Make loans or gifts to themselves
  • Divert trust assets to benefit themselves
  • Sell trust assets to another trust or entity that benefits them

When should I contact a trust litigation attorney?

If you suspect a trustee is stealing from a trust, engaging in self-dealing, or you are not receiving the assets you are entitled to receive, you should contact a trust litigation attorney as soon as possible before the assets are gone and no longer collectible. An experienced trust litigation lawyer can evaluate your situation and, if necessary, represent you in litigation to pursue a dishonest trustee.

Do I need a trust litigation attorney Near Me?

If you have a trust dispute, hiring the best attorney familiar with the local probate court where your case is going to be heard and decided often will get you the best result.  Hiring someone local can be logistically favorable, but the reality is that familiarity with the court and its judges, processes and rules will help move your case along more efficiently and cost-effectively, getting you a better result sooner and likely for less legal spend.

 

 

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Have questions? We’re happy to discuss.

Call (424) 320-9444 or email hello@rmolawyers.com

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About RMO, LLP

RMO LLP serves clients in Los Angeles, Santa Monica, Ventura, Santa Barbara, San Francisco, Orange County, San Diego, Kansas City, Miami, and communities throughout California, Florida, Missouri, and Kansas. Our founder, Scott E. Rahn, has been named “Top 100 – Trust and Estate Litigation” by SuperLawyers, Trusts and Estates Litigator of the Year, and Best Lawyers in America for Litigation – Trusts and Estates. For a free consultation, call (424) 320-9444 or visit: https://rmolawyers.com.