Trust Beneficiary Notice Requirements: The Trustee's Legal Duty

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.

Notifying Beneficiaries of a Trust

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. If your state does not have specific rules about what the notice must contain (but most do—see the sections 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 to pay off debts, or you might be the executor as well as successor trustee.) That may take only a few weeks, or it could take a few months.

States That Require Trustee Notice to Beneficiaries

Most states have specific rules about how and when a successor trustee must notify beneficiaries about a trust. These states include:

What to Send in Your Notice Letter to Beneficiaries, When, and to Whom

Whom to Notify. Your state's rules will specify whom you must notify. For example, California requires notifying legal heirs as well as beneficiaries. (Legal heirs are the relatives who would inherit property under the law if there were no will or trust.) In many states, the rule is that 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.

What to Include in the Notice Letter. The notice typically 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 a 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.

When to Send the Notice Letter. How long does a trustee have to notify beneficiaries? States vary, but the deadline is commonly within 30 or 60 days of the settlor's death.

Look up your state's exact rules. 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.

Example: In Florida, within 60 days of the death, the trustee must give notice to beneficiaries of (1) the trust's existence, (2) the identity of the person who made the trust, (3) the right of beneficiaries to request a copy of the trust document, (4) the right of beneficiaries to a trust accounting, and more. (Fla. Stat. § 736.0813.)

Example: In California, within 60 days of the death, the trustee must give notice to beneficiaries of the trust as well as legal heirs of (1) the identity of the person who made the trust and the date the trust was made, (2) the name, phone number, and address of the trustees, (3) the address of the physical location where the trust is being administered (often the trustee's residence), (4) the entitlement of beneficiaries and heirs to request a copy of the trust document, and more. (Cal. Prob. Code § 16061.7.)

Consequences If You Don't Notify Beneficiaries

Trustees owe a fiduciary duty to the trust beneficiaries—meaning you must always act in the best interests of the beneficiaries. Failure to do so can result in your removal from the role of trustee. State rules may also specify consequences for trustees who fail to notify beneficiaries; for example, in California, a trustee can be responsible for damages, attorney's fees, and costs caused by a failure to notify a beneficiary of a trust.

But aside from legal reasons to send notices to beneficiaries in a timely manner, it's simply good practice to keep beneficiaries in the loop. It sets the tone for a communicative relationship, heading off problems in the future. After all, beneficiaries certainly have reason to be interested in the details of how and when trust distributions will be made, and it's best to keep them informed, both early on and throughout the process, so they know what to expect.

For more advice on serving as trustee, see Payment for Serving as Trustee.