If you are serving as trustee of an irrevocable trust, it is very important to understand and properly execute your fiduciary responsibilities. There are many duties that are straightforward. However, many duties are governed by statute. It is best to consult with an attorney to ensure that you properly fulfill your obligations to the beneficiaries according to the specific terms of the governing trust agreement, applicable statutes and other laws of the jurisdiction in which the trust is being administered. This is important in carrying out the intent of the creator of the trust, and it is also important to protect yourself.
While a trustee or successor trustee has numerous responsibilities to the beneficiaries of a trust, one of the most important responsibilities is to provide ongoing notification to the beneficiaries.
California law regarding notifications to trust beneficiaries
California law requires that “the trustee has a duty to keep the beneficiaries of the trust reasonably informed of the trust and its administration.” Not only is a trustee required to provide information to the beneficiaries of a trust, in some instances the heirs of a deceased settlor of the trust who may or may not be beneficiaries of trust, are also entitled to this information. Notices are also required upon the request of trust beneficiaries and certain heirs of the deceased settlor, and the law also requires a trustee to provide some notifications regarding the trust upon the occurrence of certain changes and events. For example, notifications are required by the trustee:
- Upon the death of a settlor of a trust;
- When all or a portion of a revocable trust becomes irrevocable;
- When there is a change of in the person or persons serving as trustee;
- When a settlor’s power of appointment lapses or become effective; and
- When any other significant changes regarding the trust and its terms occur.
In addition, California law provides that a trustee only has a period of 60 days to notify beneficiaries (and in some cases heirs) of these changes. The notifications should include the date of the trust execution, identifying information for each serving trustee and any additional information expressly required.
In some cases, it may be difficult to locate certain beneficiaries of a trust or heirs of a deceased settlor of a trust. In such cases, there are exceptions for the notification requirements as long as a trustee has made a reasonable effort to locate the persons entitled to notice.
It is best practice for trustees to retain legal counsel to advise them regarding all of their duties as trustee including these notification requirements.