Notice Requirements to Beneficiaries by a Trustee
What notice or documents does a trustee legally have to turn over to the beneficiaries?
One of the most common questions we receive when someone comes in after realizing they are the trustee (manager) of a trust is what do they have to tell the beneficiaries? What documents do they have to provide? Additionally, while not terribly common, we have seen many instances where people begin asking around for trust documents and when they are going to get their expected inheritances.
A trustee does have a duty to provide a notice to heirs and beneficiaries of a trust in a few circumstances, but we will be discussing the two (2) most common that cover the vast majority or circumstances where this duty to provide notice arises. All of these are outlined in the California Probate Code Section 16061.7.
The first instance is when a revocable trust, or any portion thereof, becomes irrevocable due to a variety of circumstances – typically either by the terms of the trust itself or where one or more of the trustors/settlors, that is the makers of the trust, passes away. An example of this would be a husband and wife setting up a typical revocable living trust. If one passes away, the other may still amend or change the trust, thus no notice is required to be served to the beneficiaries. However, once the survivor passes, the trust becomes irrevocable as the parties who made it, the husband and wife, have now both passed away. Due to this, the trustee then must serve notice to the heirs and beneficiaries of the trust.
The second instance is when there has been a change of trustee of an irrevocable trust (note, this triggers a duty to account as well). Usually there is a change of trustee when the currently trustee is unable or unwilling to serve for whatever reason – typically due ether to health reasons or for convenience – sometimes it is easier to have someone located more local to where the trust assets are (E.g., a family home). However, a trustee can be removed by a court for committing a breach of trust, but that is a topic deserving of its own discussion.
In either circumstance, the trustee is on a time limit too. This notice must be served within 60 days of the event giving rise to the duty to provide notice. That means if a trust becomes irrevocable due to the death of the trustor, the trustee then has 60 days from the date of death to serve notice to the heirs and beneficiaries.
Additionally, there are some requirements for the content of the notice going as far as to cover the formatting of the font itself. Most importantly however, the notice must include this statement, “You may not bring an action to contest the trust more than 120 days from the date this notification by the trustee is served upon you or 60 days from the date on which a copy of the terms of the trust is delivered to you during that 120-day period, whichever is later.” Hence why we call them 120-Day notice letters.
What that statement means is the party who receives notice has 120 days, from the day they receive their notice, to challenge the trust, otherwise they are precluded from doing so. In addition to this, they can toll or extend that 120 days to about 180 days by asking for a copy of the trust close to the end of that period. Therefore, it is good practice to simply include a copy of the trust with the notice itself to avoid that kind of game playing or delays in administration. Regardless, heirs and beneficiaries are entitled to a copy of the trust when it becomes irrevocable so there is no reason not to simply include it with the notice.
Please keep in mind that this statement is primarily focused on closing claims related to the validity of a trust, not a trustee’s actions in administering the trust itself. Thus, simply because a trustee has met their duty to notify heirs and beneficiaries to a trust, does not mean the trustee’s other duties in that capacity need not be met. Some examples are a trustee’s duty to account, operate in the best interest of the beneficiaries (loyalty), further communicate with beneficiaries, etc.
Finally, due to the probate code having strict timing requirements, many points of contention regarding these notices arise when parties either fail to meet these deadlines or fail to have proof of meeting them. To attempt to avoid these issues, trustees are often encouraged to mail these notices via Certified Mail with a return receipt requested. That way, a record of the delivery of the notice and all enclosed documents may be kept should a timeline need to be established later.
To summarize, a trustee must provide notice to heirs and beneficiaries of a trust when the trust, or a portion of it, becomes irrevocable, or when there has been a change of trustee of an irrevocable trust. The trustee has 60 days to serve that notice and it must conform to the requirements of the probate code. Finally, while not required, it is best practice to include a copy of the trust with the notice since the heirs and beneficiaries are entitled to a copy regardless and to track any notices or documents sent in the mail.
While the probate code is relatively constant, everyone’s situation and circumstances are different meaning every case must be approached in a careful and thoughtful manner. Thus, if you are a trustee of a trust, you should speak with an attorney to make sure you are aware of your duties and to know what actions you need to make to meet those duties under the law.
Additional Resources:
California Probate Code - Law section (ca.gov)
