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FAMILY FINANCES
November 1, 2019

What are my rights as a trust beneficiary, and what do I need to know?

Answered by
Scott Marantz
Managing Director, Division Trust Executive, Bank of America
As a trust beneficiary, you enjoy certain rights, even though the money belongs to the trust, not to you. While you can review its provisions and ask questions of designated trustees, you aren't able to control withdrawals and distributions.
Here are some questions you might have about trusts and your rights as a beneficiary:
What, exactly, is a trust?
It's a financial agreement in which a designated trustee oversees assets intended to help one or more beneficiaries. The agreement details how those particular investments should be managed and how the assets will be distributed.
What kinds of trusts are there?
There are many types of trusts, which vary according to the goals of the grantor, the person who creates the trust. Trusts can be either living or testamentary — meaning they are either established during the grantor's lifetime or when that person dies, respectively. They can also be revocable or irrevocable. Grantors of revocable trusts have the right to change their mind and dissolve the trust. Revocable trusts generally become irrevocable upon the grantor's death.
Can I read the agreement?
Yes. Trusts are legal documents — some are lengthy and complex, others short and succinct. You have the right to receive and read all documents governing any trust you are named in. You may want to go over the language with a lawyer.
Can I review the assets?
Yes. The trustee should provide the beneficiary with a detailed list of the assets at least annually after the death of the grantor. In some cases, you will not be able to view the statements while that person is alive.
Can I review transactions?
Yes. As with the list of assets, you may see the specific distributions, tax payments and investment transactions of the trust, starting when the grantor dies. These should be included in periodic statements provided by the trustee.
Can I withdraw money?
It depends. You can't technically make a withdrawal from a trust, but you may be able to request a distribution from the trustee, who can do that for you if it is in line with the terms of the trust document. One factor might be whether the trust is revocable or irrevocable. Talk to a trust professional for more details about these types of trusts.
Can a trustee remove me as a beneficiary?
It depends. Grantors of revocable trusts can add or remove beneficiaries. In addition, the grantor of an irrevocable trust may have included language that allows a beneficiary to be removed under specific circumstances. While this is unusual, you may want to review the trust documents with your advisors to understand how and when this could occur.
"You can't technically make a withdrawal from a trust, but you may be able to request a distribution from the trustee."
— Scott Marantz, Managing Director, Division Trust Executive, Bank of America
Can I terminate a trust?
No. The person who created the trust sets the timeline for its life span. If, for tax reasons, you prefer not to continue as a beneficiary, you may be able to renounce the trust — if you act early. If you feel you're not being treated fairly or that the trust is not serving its intended purpose, you may be able to contest it. But be sure to speak with your advisor or a trust expert before taking action.
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Merrill, its affiliates, and financial advisors do not provide legal, tax, or accounting advice. You should consult your legal and/or tax advisors before making any financial decisions.
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