In this part of our continuing series on Texas trust disputes, we talk about beneficiary rights. When those rights are ignored or intentionally dismissed, a trust dispute may be necessary. If you assume trustees cannot steal or misuse trust funds and property, you would be correct. But those are not the only situations that lead to trust disputes.
In our previous post on trust disputes in Texas, we identified the people who can bring trust claims, along with some examples of when you may have a claim. Now, we will talk about trust claims in more detail by identifying specific rights of beneficiaries and the ways beneficiaries can enforce those rights.
Texas trust beneficiaries have a set of automatic rights. Many of those rights come from a part of the Texas Property Code known as the Texas Trust Code. Other rights come from the legal traditions known as common law. Every beneficiary starts with this set of automatic rights, but the specific terms of your trust may expand those rights, restrict them, or add new rights.
–Receiving a Copy of the Trust. Trust beneficiaries have a right to know the terms of the trust. Those terms are in a document of some kind, like a trust agreement or last will and testament. Trust beneficiaries have the right to receive a copy of that document and any other terms of the trust.
–Required Distributions. A trust beneficiary may be entitled to regular distributions of trust funds. This depends on the specific terms of the trust. Sometimes, the trustee can use their judgment to decide whether, when, and how much to distribute. Other times, the trust terms impose strict requirements on the trustee. The trust terms may require that the trustee make distributions at specific times like every month, every year, or when a beneficiary reaches a certain age. The terms may also require a certain sized distribution, for example a specific amount of cash or all interest payments from an account. Trust beneficiaries have the right to force the trustee to make all required distributions.
–Trust Accounting. Trust beneficiaries have the absolute right to demand an accounting from the trustee. An accounting is a document prepared by the trustee for the beneficiary. Generally, the accounting will tell the beneficiary what property is in the trust and what the trustee has been doing with that property.
–Disclosure of Information. In addition to the foregoing rights, trust beneficiaries have a general right to receive information about the trust. There is no specific rule about the amount and quality of that information. Depending on the circumstances, beneficiaries may be entitled to regular communications from the trustee, monthly statements from trust accounts, and books and records from businesses owned by the trust. Trust documents sometimes grant beneficiaries a more extensive, specific set of rights to receive information.
Those are the rules, but what happens when they are broken? Sometimes, just asking is enough. Often, however, trustees are unaware of beneficiary rights, ignore them completely, or believe they can make their own rules. In those cases, legal action may be required. For example, an experienced Texas trust lawyer can help the beneficiary make demands to the trustee, ask a court to remove and replace the trustee, or even file a lawsuit against the trustee.
At The Johnson Firm, we regularly help beneficiaries throughout Texas enforce their rights and get what they’re entitled to. Please give us a call if someone is denying your rights.
Next up, a related topic: the duties of Texas trustees and the consequences for breaching them.