This second post in our series covers the reasons why Texas trust beneficiaries may lack trust information. Our previous post provided an overview of this series and the other topics it will cover.
First off, though, you should understand the concept of a trust and how it functions. Fundamentally, a trust is a holding device, which will eventually distribute assets called trust property. Trust property may consist of anything that can be owned, including cash, houses, or investment accounts. Trust beneficiaries are the people who are entitled to receive the trust property. Settlors make the trust agreement that creates the trust, store the initial trust property in the trust, and define the rules about how the trust is managed and when the trust property is distributed. Trustees manage the trust and follow the rules provided by the settlor.
It’s possible for the same person to be the settlor, beneficiary, and trustee of the same trust. Often, however, each role is filled by a different person. For example, Mom and Dad may be the settlors of a trust, their children are the beneficiaries, and a bank is the trustee. Trust beneficiaries often lack access to information in that scenario, when the beneficiaries aren’t trustees or settlors.
Beneficiaries may need information about a trust for any number of reasons:
-Trust distribution terms. Beneficiaries often lack the most basic information about the trust—whether they are beneficiaries, when they can receive distributions of trust property, and the size of the distribution they’re entitled to receive. These beneficiaries need to see the trust agreement, which is the document created by the settlor that sets up the trust. On rare occasions, you’ll be able to find the trust agreement in public deed records or the probate court case file. Otherwise, you’ll need to ask the settlor or trustee for a copy of the agreement.
–Contents of the trust. What’s in the trust? The trust agreement usually won’t have the answer. At most, it may designate some of the trust’s initial property. But it doesn’t prove that any property was actually transferred into the trust or that it still remains. The trustee, rather than the trust agreement, should have the answer you’re looking for.
–Trust activity. What happened to the trust property? Is it sitting in a checking account with a nonexistent interest rate? Have trust assets been spent for an improper purpose? How much is the trustee paying himself or herself? Has the trustee distributed a disproportionate amount to my siblings? If the trust property includes land or minerals, you may find some limited information in public deed records. Otherwise, you’ll need to ask the trustee for this information, as banks and other holders of trust property are unlikely to discuss trust issues directly with beneficiaries.
You can probably see a common theme in these scenarios. Regardless of the information you need, it’s likely that the trustee is the gatekeeper. So how do you get this information from the trustee? And what happens if the trustee ignores or refuses your requests? The next posts in this series will address these topics and more. Next up, we’ll talk about the ways that trust beneficiaries can seek the trust information that they need.
You may have other questions as a trust beneficiary. The attorneys at The Johnson Firm are available to help trust beneficiaries. Our team of highly educated, experienced Dallas trust attorneys advises and assists beneficiaries throughout Texas. If are curious about your rights as a trust beneficiary, call us today. Our offices also serve Plano, Frisco, McKinney, Denton, Fort Worth, Garland, Irving, Austin, Houston, San Antonio, Nacogdoches, Lufkin, and Center.