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What information should a successor trustee share with beneficiaries?

by Kelly Gicale | Contributor
April 4, 2023

While you may know that a successor trustee oversees and manages trust assets, there are also other actions they must take in order to fulfill their duties and avoid potential liability. For example, as a successor trustee, you are expected to follow legal requirements for sharing information with the trust beneficiaries. You also are legally required to provide certain notifications to specific interested parties.

If you have been named as successor trustee of a loved one’s trust, or if you have a trust yourself and are interested in learning more about what will be required of the person you select to serve as successor trustee, then this article will be useful for helping you to understand one of the main functions of this important role.

In addition to managing and administering trust assets, the successor trustee will also be expected and required to share information with the trust’s beneficiaries and others. Below, you can learn the details of when — and who — a successor trustee should share information with about a given trust.

What is a successor trustee?

The successor trustee is the person named to take over serving as trustee of a trust when the original trustee has passed away or is incapacitated and cannot continue acting in this role.

In most cases, when a person creates a revocable living trust (the most common kind of trust used for estate planning purposes), he or she will name themselves as the original trustee. By doing so, they can retain authority over the assets they place in the trust. This is because a trustee legally controls the management and distribution of trust assets.

The person who creates the trust also generally must name a successor trustee in the trust documents. The person named as successor trustee will immediately be granted authority over trust assets (usually to take the same actions the original trustee could take) when the original trustee is incapacitated and cannot make or communicate decisions, or when the original trustee passes away.

When is a successor trustee required to notify trust beneficiaries?

In general, the successor trustee’s duty to notify trust beneficiaries begins almost immediately after they begin serving in this capacity. This and other notice requirements are provided by state law, so the specifics in your case will depend on applicable laws of the state where the trust is located. Typically, however, state laws direct that a successor trustee must contact the trust beneficiaries and provide initial notice when they take over control of the trust and its assets. Several states require notice to be sent to all trust beneficiaries within a certain specified time after the successor trustee begins managing the trust. In these states, the initial notice must typically be provided within 30 or 60 days.

In addition to providing initial notice to trust beneficiaries when you first take on this role, you also will need to communicate with them regarding the management and distribution of trust assets. It can be helpful to set expectations in these notices regarding the amount and timing of distributions, as many beneficiaries are not experienced in this kind of process and could become agitated if they do not receive their inheritances quickly, or if the value is lower than what they were anticipating.

What information should a successor trustee share with beneficiaries?

Trust beneficiaries paperwork

As mentioned above, you will need to consult your state’s laws to determine if there are any specific requirements as to the form of notice or information that must be included in the initial and subsequent notices to trust beneficiaries. However, when the original trustee/person who established the trust passes away, you likely will need to prepare a letter to all named trust beneficiaries to let them know:

  • That the trust has become an irrevocable trust (which means it generally cannot be changed) as a result of the original trustee’s passing,
  • That you as the successor trustee now have control over the trust assets, and
  • That you will distribute the trust assets to the beneficiaries as provided in the trust documents as soon as possible (assuming the person who created the trust intended to distribute the trust assets to the named beneficiaries upon their death).

In addition, if your role as successor trustee includes any further management of trust assets (for example, if a beneficiary is underage and/or the trust was set up to pay out distributions over time vs. immediately upon the original trustee’s death), then you will also need to share information about trust asset value and potentially other changes over time as required by your state’s laws.

Who else does a successor trustee need to notify?

As with any trustee of a trust, a successor trustee owes several legal duties to the named beneficiaries, including the duty to notify and share information about the trust assets with them. While you might assume that this duty only extends to the beneficiaries of the trust, there are other interested parties that you likely also need to consider and are required to communicate with, especially when settling the trust after the original trustee has passed away.

Depending on the laws of your state, you may also need to provide initial notice to other people who are not named beneficiaries of the trust. For example, some states legally require you as the successor trustee to notify “legal heirs” about the trust as well. “Legal heirs” are those people that the state recognizes as beneficiaries of a person’s estate when they pass away without a will in place. This typically includes blood relatives (children, parents, siblings, etc.) and those who are legally adopted by the person who passed, but again, the specifics will depend on your state’s laws.

Finally, some states also require you to provide initial notice to any person considered a “qualified beneficiary” of the trust. A “qualified beneficiary” is essentially anyone who could be entitled to receive funds or other distributions from the trust. This means all beneficiaries, including those who are named as contingent beneficiaries. A contingent beneficiary is someone who only receives an inheritance if a primary named beneficiary has already passed away when the distribution would be made to him or her.

For example, the person creating the trust could direct that her son will receive her home (which is held in the trust) only if her husband has predeceased (or passed away before) her. In this instance, her home will go to her husband, but if her husband has already passed away at her death, then it will go to her son. Even though her son is not the primary named beneficiary, he would be considered a “qualified beneficiary” who also must be notified when the successor trustee takes over managing the trust because he is a contingent, or alternate, beneficiary.

To ensure that you as successor trustee notify all “qualified beneficiaries” as required by your state’s laws, you will likely want to consider sending notice to anyone that:

  • Could receive trust funds or assets now,
  • Could receive trust funds or assets from if the primary or current beneficiaries passed away, and
  • Could receive trust funds or assets if the trust were closed out.

Because of the potential need to notify people other than the named primary beneficiaries of the trust, it will be important to refer to your state’s laws when preparing the initial notice. Below, you can learn more about what you should include in the notice that you send to these other interested parties.

What information should a successor trustee share with other heirs?

As with any trustee of a trust, a successor trustee owes several legal duties to the named beneficiaries, including the duty to notify and share information about the trust assets with them. While you might assume that this duty only extends to the beneficiaries of the trust, there are other interested parties that you likely also need to consider and are required to communicate with, especially when settling the trust after the original trustee has passed away.

Depending on the laws of your state, you may also need to provide initial notice to other people who are not named beneficiaries of the trust. For example, some states legally require you as the successor trustee to notify “legal heirs” about the trust as well. “Legal heirs” are those people that the state recognizes as beneficiaries of a person’s estate when they pass away without a will in place. This typically includes blood relatives (children, parents, siblings, etc.) and those who are legally adopted by the person who passed, but again, the specifics will depend on your state’s laws.

  • Basic information about the trust: This simply means that you should tell them that the trust exists. You do not need and should not offer more specific details about the trust assets, value, etc., especially to those heirs at law who are not beneficiaries (unless state law provides otherwise). While “qualified beneficiaries” may know about the trust, that might not always be the case, so it’s important to let them know about the trust’s existence as well.
  • Your name and contact information: Providing your information will be essential to ensure that qualified beneficiaries and others know how to reach you with any questions or to take permitted actions.
  • Deadline for a legal challenge or contest: The initial notice should also typically include the date by which a court challenge must be filed. Although it is rare for a beneficiary, even a qualified beneficiary, to challenge a trust, it is still important to provide this deadline in your initial communication. With heirs at law, they may or may not have legal standing to challenge the trust based on the laws of your state. However, it could be beneficial to cover your bases and provide this date just in case, or it may also be required by your state’s laws.
  • Rights of qualified beneficiaries: All beneficiaries, including qualified beneficiaries, have the right to request a copy of the trust document. So, in this initial notice, you should also inform qualified beneficiaries that they have the right to see the trust and that you will send them a copy upon request. You could choose to include a copy of the trust with the initial notice to these beneficiaries, but you are not typically required to do so unless they ask.
  • Other information required by your state’s laws: Your state may require you to provide certain information to qualified beneficiaries, or it may dictate what kind of notice heirs at law are legally entitled to receive. For this reason, it’s essential to understand the rules at play in your state and follow them exactly as provided. If anything is unclear, or if you want to make sure that you give the right notice to the right people, then you may want to consider working with a qualified estate planning attorney who is experienced in your state’s laws.

When should a successor trustee require a demand for information?

Everything covered so far has related to notice you must provide to beneficiaries and others as a successor trustee. But what if you have a situation where someone wants details or information about the trust that you’re unsure if you should share or legally can share with them?

This question is key, because one of the main benefits a trust offers in the context of estate planning is privacy. When someone uses a will as their central planning document, the details of their estate may become public record through the probate process. As a result, many people, especially those concerned with privacy, will opt for a revocable living trust instead. To ensure that you preserve that privacy, you will want to make sure that you do not reveal information that is not required or provide information about the trust to people who are not legally entitled to receive it.

Your state’s laws are going to be critical for understanding what you must provide vs. what you should not share. It is typically good practice to only offer information that is legally required to those persons identified by law.

Beneficiaries are going to be the safest in terms of sharing, as they tend to have the most expansive legal rights to information relating to the trust. In addition to the initial notice, they also have the right to request a full copy of the trust document to review. They also typically have the right to trust accountings, which are detailed inventories of trust assets and values and the actions the trustee takes. Conversely, you will be well-served to take time and investigate requests from heirs at law or other non-named beneficiaries before answering their requests or providing information to them, as they tend to have the least legal rights to information about a trust. Overall, however, state laws will be your best friend in determining whether to share information or whether you should request a formal, legal demand (which will be heard and decided by a court) from the person asking for the information before doing so.

Summary

Notice requirements, both in terms of when, to whom and what information should be included, can vary greatly from state to state. As a successor trustee, your primary responsibilities are to follow the directives of the trust as well as state laws while serving the best interests of the trust beneficiaries. If you ever are concerned about whether or not the notice you’re providing is adequate, then consulting an experienced estate planning attorney who can assist you with your required duties, including providing notice, will be invaluable.

How do I create an estate plan?

There are numerous options and scenarios to consider when developing an estate plan that protects your legacy and achieves your objectives, and important decisions should be made with the advice of qualified lawyers and financial experts. Membership with Legacy Assurance Plan provides members with valuable resources and guidance to develop comprehensive estate plans that take life's contingencies into consideration and leave a positive impact for generations to come. Legacy Assurance Plan members also receive peace of mind that a team of trusted, experienced professionals will assist them in developing legal, financial and tax strategies that will meet their needs today and for years to come through periodic reviews.

This article is published by Legacy Assurance Plan and is intended for general informational purposes only. Some information may not apply to your situation. It does not, nor is it intended, to constitute legal advice. You should consult with an attorney regarding any specific questions about probate, living probate or other estate planning matters. Legacy Assurance Plan is an estate planning services company and is not a lawyer or law firm and is not engaged in the practice of law. For more information about this and other estate planning matters visit our website at legacyassuranceplan.com.

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