Did you know that trusts are a fundamental component of Wisconsin estate planning? They can offer a means to protect and manage assets for the benefit of specific individuals or entities. While trusts provide a structured framework for wealth management, it is essential to grasp the rights that beneficiaries hold within this legal arrangement. We want to explain the rights that trust beneficiaries possess with a trust agreement and show how these rights can shape their interactions with both the trust and its trustees.

1. Beneficiaries need to know they have a right to information. Once a trust becomes active, trust beneficiaries have the right to be kept informed about the details and operations of the trust. Trustees are obligated to provide accurate and complete information, offering insights into trust assets, investments, distributions, and any significant transactions. This transparency ensures that beneficiaries are aware of the status of the trust and can make informed decisions when requested to do so.

2. Beneficiaries need to know they may have a right to distributions. Did you realize that the primary purpose of a trust is to provide benefits to its beneficiaries? Depending on the terms outlined in the trust document, beneficiaries may have the right to receive distributions, whether those are regular income payments, lump-sum distributions, or other forms of benefits. The provisions of the trust will determine the timing and nature of these distributions but in the management of the trust there should be transparency with regard to these potential payments or other forms of distributions.

3. Beneficiaries need to know they have a right to an accounting. Accountability is of the greatest importance in trust management. Beneficiaries are entitled to an accurate and comprehensive accounting of trust activities. This includes information about the assets, liabilities, income, expenses, and distributions of the trust. This right ensures that trustees are held accountable for their management of the trust and that beneficiaries can verify the actions of the trustee.

4. Beneficiaries need to know they have a right to challenge. Are you aware that if beneficiaries believe that a trustee has acted improperly or breached their fiduciary duties, they have the right to challenge these actions?  When working with an experienced Wisconsin estate planning attorney, this might involve filing a lawsuit to rectify the situation, seek damages, or remove an unfit trustee. Beneficiaries’ rights to challenge ensure that trust assets are managed in the best interests of the beneficiaries.

5. Beneficiaries need to know they may have the right to terminate or modify. Be aware that, in certain cases, beneficiaries may have the right to request the modification or termination of a trust. This could be due to changes in circumstances, the achievement of the trust’s purpose, or other valid reasons. The ability to modify or terminate a trust ensures that the provisions of the trust remain aligned with the evolving needs and goals of the beneficiaries which your experienced Wisconsin estate planning attorney can explain to you.

It is important to note that while trust beneficiaries hold rights, trustees also have their own set of responsibilities. Trustees are legally obligated to act in the best interests of the beneficiaries, manage trust assets prudently, provide accurate accounting, and carry out the terms of the trust document faithfully.

Trust beneficiaries play a pivotal role in the success and effectiveness of a trust. Understanding the rights bestowed upon beneficiaries within the trust framework is crucial for both beneficiaries and trustees. If you are a trust beneficiary, knowing your rights empowers you to actively engage in the administration of the trust, ensuring that it serves your best interests and aligns with your financial goals. For trustees, adhering to beneficiaries’ rights is a fundamental aspect of fulfilling your fiduciary duties and maintaining the trust’s integrity.

We know this blog may raise more questions than it answers. We encourage you to contact us and schedule a meeting with attorney Alan Hougum today.