When comparing a trustee and a beneficiary of a trust, it is difficult to say who has “more rights,” as they each have completely different roles, powers, and responsibilities.
While the trustee has a great deal of authority to administer the trust and manage its affairs, they also are bound by a fiduciary duty to act in the best interest of the trust beneficiaries. And although a beneficiary generally has very little control over the trust’s management, they are entitled to receive what the trust allocates to them.
In general, a trustee has extensive powers when it comes to overseeing the trust. The specific rights of any trustee are, in part, dictated by the terms of the trust instrument. However, here are some of the rights that trustees will generally have:
- The power to collect, hold, and retain trust property.
- The power to accept additions to the property of the trust.
- The power to invest and deposit trust funds.
- The power to manage, control, divide, develop, improve, exchange, partition, change the character of, or abandon trust property or any interest therein.
- The power to encumber, mortgage, or pledge trust property.
- The power to insure the trust’s property against damage or loss and to insure the trustee against liability to third persons.
- The power to borrow money for any trust purpose to be repaid from trust property.
- The power to manage claims by and against the trust.
- The power to pay taxes, assessments, reasonable compensation of the trustee and employees and agents of the trust, and other expenses incurred in the collection, care, administration, and protection of the trust.
- The power to make loans out of trust property to the beneficiary.
- The power to pay any sum of principal or income distributable to a beneficiary.
- The power to hire persons, including accountants, attorneys, auditors, investment advisers, appraisers, or other agents, to advise or assist the trustee in performing administrative duties.
- The power to execute and deliver all instruments needed to accomplish or facilitate the exercise of the powers vested in the trustee.
On the other hand, the rights of the trust beneficiaries include:
- The right to receive a copy of the trust document.
- The right to receive timely distributions according to the terms of the trust.
- The right to receive and challenge accountings.
- The right to be kept reasonably informed concerning the administration of the trust.
- The right to impartial treatment by the trustee.
- The right to petition the court to have the trustee suspended or removed.
Can a Trustee Override a 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. This means that if a beneficiary disagrees with the distribution schedule or any other terms outlined in the trust, the trustee must disregard the beneficiary’s wishes and carry out the trust’s written requirements.
If the terms of the trust are ambiguous, a trustee should consult with legal counsel before taking any action. If the ambiguity cannot be resolved with the consent of the beneficiaries, trustees can ask the probate court for guidance through a petition for instructions.
Can a Beneficiary Override a Trustee?
No, beneficiaries generally cannot override a trustee unless the trustee fails to follow the terms of the trust instrument or breaches their fiduciary duty.
Even when a beneficiary disagrees with a trustee’s actions, they typically cannot override the trustee just because they don’t like their choices. Unless the trustee clearly violates the terms of the trust or breaches their fiduciary duty, there is typically little a beneficiary can do.
However, suppose a beneficiary thinks that the trustee is abusing their power or failing to follow the requirements outlined in the trust instrument. In that case, they have the legal right to ask the court to suspend or remove the trustee from their position.
How Can a Trustee or Beneficiary Protect Themselves?
Whether you are a trustee or a beneficiary, the best way to protect yourself is to seek assistance from an experienced trust attorney.
As a trustee, a lawyer can help you understand your duties and ensure you are complying with the terms of the trust instrument and your obligations. We suggest that new trustees retain a trust attorney when they first consent to serve as trustee; before any trouble arises. That way, your lawyer can ensure that you fully comprehend the requirements of your position as trustee so you can avoid making costly mistakes that could expose you.
For beneficiaries in a dispute with a trustee, a probate litigation attorney can review the trustee’s actions and advise you on the likelihood of the trustee being removed or successfully sued for any misconduct. Even if the trustee hasn’t committed a breach of trust, they may nonetheless be subject to removal for other causes, so discussing the situation with a knowledgeable lawyer is the first step you should take if you are having issues with a trustee.
Have questions? We’re happy to discuss.
Call (424) 320-9444 or email [email protected]
Read More
Can Trustees Be Held Personally Liable?
The Trustee’s Guide to Trust Distributions
The Trustee’s Guide to Avoiding Trustee Removal
The Guide to Breach of Fiduciary Duty and Abuse
About RMO, LLP
RMO LLP provides personal and efficient inheritance dispute services to individual and institutional clients. The firm’s attorneys focus on probate litigation involving contested trust, estate, probate, and conservatorship matters. Serving California and Texas, with offices in Los Angeles, Pasadena, Orange County, San Diego, Fresno, the Bay Area, Dallas, and Houston. For more information, please visit RMO Lawyers.
