Trust Beneficiary Notice Requirements: The Trustee's Legal Duty

It's the trustee's responsibility to keep beneficiaries informed about what's going on with the trust. Here's how to keep trust beneficiaries in the loop.

Trustees have a legal duty to keep the beneficiaries of a trust informed about how the trust assets are being managed. If the beneficiaries don’t have good, current information, they can’t protect their rights. This responsibility lasts as long as you’re serving as trustee. But it can be especially important when you first take on the job of trustee—after all, you want to start off on the right foot.

The First Notice

As soon as you take over as successor trustee—typically, after the person who created the trust (the settlor) has died—let the beneficiaries know. Unless your state has specific rules about what the notice must contain (see below), a simple letter will do; no special legal language is necessary. Just explain the key facts, which usually are that:

  • the living trust has become irrevocable because of the settlor’s death
  • you are in charge of the trust assets, and
  • you will distribute the trust assets to the beneficiaries as soon as you can.

Try not to raise any unreasonable expectations. You may want to mention that you won’t be able to distribute trust assets until you’ve determined what those assets are and also figured out what debts and taxes need to be paid. (You’ll be working with the executor on that issue.) That may take only a few weeks, or it could take a few months.

State Requirements About Notifying Beneficiaries

Some states have specific rules about how and when a successor trustee must notify beneficiaries about a trust. You may be required to send a notice to all beneficiaries within a certain time period, commonly 30 or 60 days. You may also be required to send notice to the deceased person’s legal heirs. These are the relatives who would inherit under law if there were no will or trust.

States That Require Trustees to Send Notices

Arizona

Arkansas

California

Colorado

District of Columbia

Florida

Kansas

Maine

Michigan

Missouri

Nebraska

New Hampshire

New Mexico

North Dakota

Oregon

South Carolina

Tennessee

Utah

Virginia

Wyoming

What to Send, and To Whom

In some states, you must send notices to "qualified beneficiaries." Those are people to whom you could distribute trust assets, who would receive trust assets if the trust were terminated now, or who would inherit if the current beneficiaries died. If you’re handling a simple living trust, qualified beneficiaries are just the people named in the trust document.

The notice must tell the beneficiaries about the trust and give them your name and address. You must also let them know that they have the right to request a copy of the trust document from you. (You don’t have to send them a copy unless they ask for one.) The notice gives the beneficiaries deadline for challenging the trust in court—for example, if they don’t think the settlor had the mental capacity to know what he or she was doing when creating the trust. But challenges to trusts are quite rare.

There can be stringent requirements about exactly what the notice must contain and even what size the type must be in. Make sure you follow your state’s rules to the letter, and if you’re in doubt, consult a local attorney who’s experienced in trust administration.

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