Four Trust Beneficiary Notifications Trustees Need to Know About

Good communication between a trustee and the trust beneficiaries is crucial to the smooth administration of the trust.  Thus, while trustees should stay in contact with beneficiaries, there are times when a Trustee either should or must provide notification to the beneficiaries of certain trust matters. This article discusses when notifications and accountings are required and when they are not.

If you have created a revocable living trust and are the trustee and beneficiary, you are not required to provide accountings nor notifications to any other beneficiaries.  While you are alive and competent, you can amend or revoke the trust at any time.  Remainder beneficiaries, those who become beneficiaries after you pass away, are not entitled to any information about the trust.

However, once the settlor of the trust passes away, and the trust becomes irrevocable, beneficiaries are entitled to certain information and notifications.

120 Day Notice of Irrevocability

First, it is recommended that a 120-Day Notice of Irrevocability be provided to the beneficiaries.  Under Nevada statute, a trustee may notify trust beneficiaries when the trust changes from being revocable to irrevocable.  The notification must include certain key information.  And any beneficiary that receives such a notice who was thinking about contesting the trust’s validity must do so within the 120 days.  This notice essentially forces such a beneficiary to either do so or live with the trust as written.

Trustees: Protect Yourself, Know Your Duties
Trustees: Protect Yourself, Know Your Duties

Annual Accountings

Nevada trust law also requires that the trustee provide beneficiaries with an annual accounting.  The accounting notifies the beneficiaries of the status of the trust assets and what income and expenses have occurred during the year.

Notice of Proposed Action

A third type of notice that a trustee may consider giving beneficiaries is a Notice of Proposed Action.  In the event that a trustee is planning to take any significant action that will affect a beneficiary’s interest, it is recommended that the trustee provide the affected beneficiaries a 30-Day Notice of Proposed Action.  In the event the beneficiaries do not object in writing within 30 days, they are deemed to have consented to the proposed action.

Notice to Creditors

A fourth notification that Trustees should consider following the death of the trustor is a Notice to Creditors.  While not a notice to beneficiaries, this notice puts potential creditors on notice that they have 90 days in which to file a creditor’s claim, or they are forever barred from collecting such claim.  While creditor notices are required in probate proceedings, they are optional in a trust administration.  Nevertheless, to put finality to the issue of potential creditors’ claims, it is recommended that such a notice be provided.

Trustees have a fiduciary duty to the trust beneficiaries, which must always be top of mind.  Part of fulfilling one’s fiduciary duty to the beneficiaries  is providing information about the trust to the beneficiaries as it affects them.  The notifications discussed herein play a key role in keeping beneficiaries properly informed.

Leave a Reply