Trustee Obligations – a Beneficiary’s Perspective – Authored by: Anisha D. Rutkowski
If you are a named beneficiary of a Trust, you may wonder what, if any, rights your beneficiary status gives you. First, it depends on the type of Trust. If the Trust is “revocable,” meaning the person who created the Trust can change or revoke it at any time, then it is likely that you have very few rights with regard to the Trust at this point in time. But if the Trust is “irrevocable,” meaning it cannot be changed, then the Trustee owes you specific information. Many Trusts become irrevocable upon the death of the person who created the Trust. At that point, the named Trustee’s role and obligation to properly administer the Trust begins.
When a Trust becomes irrevocable upon the creator’s death, the Trustee must, at the very least, notify qualified trust beneficiaries that the Trust exists, tell them who created the Trust and if it will be registered in a specific court, and let them know that they have a right to request a copy of the Trust terms that implicate their interest in the Trust and the Trust property.
Typically, a Trust will contain tailored language regarding additional Trustee duties to carry out the wishes of the creator of the Trust, and such duties may vary depending on the types of beneficiaries involved. However, in general, Michigan law requires the Trustee to act with certain obligations in mind.
The overarching theme of the Trustee’s duties is to administer the Trust solely in the interest of the beneficiaries. This means that the Trustee owes it to you, as the beneficiary, to avoid any self-dealing when it comes to the Trust assets. The Trustee should also be completely impartial when it comes to dealing with multiple beneficiaries unless, of course, the Trust language states otherwise. And if investment decisions are needed, the Trustee owes it to the beneficiaries to make such investments prudently, seeking advice of the appropriate professionals when needed.
Michigan law also requires the Trustee to promptly comply with reasonable requests from beneficiaries for information about the Trust. And the Trustee owes beneficiaries an accounting on at least an annual basis. This means that each year, the Trustee should provide you and other beneficiaries with information regarding the Trust property, its value, any liabilities of the Trust, any funds or property received by the Trust, any disbursements made by the Trustee and, of course, the Trustee’s compensation taken from the Trust. Other disclosures are required by law in various circumstances.
As you can see, a beneficiary does not have to simply sit and wait for the Trustee to act, without any access to information. As a Trust beneficiary, it is always wise, if you are not getting the information you are entitled to or question the Trustee’s actions with regard to the Trust administration, to seek the advice of an experienced attorney so that you can rest assured that your beneficial interest is protected. If you have questions regarding the administration of a Trust, please contact our office at 248-792-9193.