What Rights Do Trust Beneficiaries Have in Minnesota?

Being named a beneficiary in a loved one’s estate plan can be a significant gift. Although distributions from trusts are often made without issue, it’s important for beneficiaries to understand that they have certain legal rights. In addition to receiving a timely distribution, beneficiaries have the right to receive certain information, and be treated fairly. If your loved one left you assets or property in their trust and a disagreement arose, probate litigation may be necessary to ensure their wishes are met.

What is a Beneficiary?

A beneficiary is a person or entity who is designated as a recipient of assets in an estate plan. They can be named in several places in an estate plan, including in a will, life insurance policy, retirement plan, on a bank account — or in a trust. There are two types of trust beneficiaries, including primary beneficiaries and contingent beneficiaries. A primary beneficiary is the first in line to receive the benefits from an asset. Contingent beneficiaries are next in line to receive the asset in the event the primary beneficiary has passed away.

Significantly, a beneficiary is entitled to more than simply the assets in a trust. They have the right to be informed about the basics of the estate, such as the accounting details, distribution date, and explanations for any delay in disbursement. They also have the right to be kept apprised if the estate is involved in any litigation.

What Rights Do Beneficiaries of Trusts Have?

A trust is a legal relationship that allows a third party called a trustee to hold and distribute assets on behalf of a beneficiary. When it comes to trusts, Minnesota law imposes specific duties on the trustee and their relationship toward the beneficiaries. Under Minnesota’s trust code, a beneficiary has the right to have a trustee who:

• Acts in good faith — A trust beneficiary has the right to have a trustee administer the trust in good faith in accordance with its terms and the interests of the beneficiaries.
• Is loyal to them — A beneficiary has a right to have a trustee who maintains a duty of loyalty to them.
• Treats them with impartiality — A beneficiary has the right to be treated in an impartial manner among the other beneficiaries.
• Acts with prudence — Under Minnesota law, a beneficiary has the right to have a trustee who acts with reasonable care, skill, and caution as a prudent person would by considering the terms and distribution requirements of the trust.
• Keeps them reasonably informed — A trustee must keep the beneficiary reasonably informed regarding the “administration of the trust and the material facts necessary to protect their interests.” They must also respond promptly to a beneficiary’s request for information related to the administration of the trust.
• Protects the trust property — A beneficiary has the right to have a trustee who takes reasonable steps to control and protect the trust property.
• Keeps adequate records — A trustee must keep adequate records regarding the administration of the trust and ensure the trust property is kept separate from the trustee’s own property.
• Enforces legal claims for the trust — A trustee must take reasonable steps to enforce claims concerning the trust that are known to the trustee and defend against them.

If the trustee has committed a breach of trust or persistently failed to administer the trust in an effective manner, a trust beneficiary has the right to request their removal. In addition, a trustee may also be removed if there is a lack of cooperation among co-trustees or there has been a substantial change in circumstances — and the court finds that removal serves the best interests of the trustees.

Removing a Trustee

If a trustee violates any of the duties that are owed to a beneficiary under the terms of the trust or by law, this may constitute a breach of trust. In such cases, it may be necessary to remove the trustee. Depending on the circumstances, a court may also have the authority to take other action such as issuing injunctive relief, prohibiting certain actions, or ordering other relief that it deems appropriate.

In the event a beneficiary believes that a trustee has committed acts requiring their removal, they may be entitled to petition the court for the trustee’s removal. Importantly, a beneficiary must provide the judge with certain evidence which can require extensive discovery. Depositions, interrogatories, document requests, witness interviews, and subpoenas may be needed to gather the information necessary for removal.

If the judge determines grounds exist for removal, they can issue an order for removal and surcharge the trustee for any damages incurred.

Contact an Experienced Trusts and Estates Attorney

If you’re the beneficiary of a trust, it’s crucial to understand your rights. At Dave Burns Law Office, I provide reliable representation and skillful counsel for Minnesota trust disputes. If you would like to discuss a trusts and estates matter, I welcome you to contact me at (612) 677-8351 or by emailing dave@daveburnslaw.com. I assist clients throughout the Twin Cities metro area and am available to meet with clients in both Minneapolis and St. Paul.