It’s right there in the name: Trustee. A trustee is someone who you and your family should be able to trust. But what happens when you can trust the trustee? Is there anything can you do? Exercising your inheritance rights is one way to legally claim what is yours if a trustee is acting irresponsibly or even illegally. Knowing that you have recourse and what your first steps should be are crucial in wresting back control.
To understand how to fully exercise your inheritance rights, it’s first best to know what exactly the roles and limitations of a trustee are.
A trustee is a person who oversees the contents of a trust, which is a legal entity created solely to hold the contents of a person’s estate—his or her assets. Placing one’s assets into a trust is a good way to avoid the probate process or to protect them from a separate legal action. Since trusts don’t have to be registered with a court, they are usually more private than wills. A person can arrange his or her trust any way he or she sees fit.
The trustee has a fiduciary duty to his or her trust. That means he or she must not think of what he or she would do with the assets in the trust; rather, the good of the trust must come first. In many cases, a person is the trustee of his or her own trust. However, in the case of complex financial situations, such as a person owning many businesses, trustees may be appointed, especially if the trust is holding assets for minors.
Trustees are also appointed for funds which are meant for charities. Sometimes public servants place business or stock interests into a “blind trust” to be managed for them so that they cannot be accused of favoritism or corruption. In a blind trust, the holder of the assets is not told how a neutral third party is managing or investing them.
For most people, a successor trustee is appointed to oversee the distribution of his or her assets when he or she passes away. Once these assets are settled, the trust dissolves. The trustee, which is similar to the role of an executor of a last will and testament, is usually a family member or close friend. Some also choose financial advisors or legal professionals to act as their trustees. However, in the aftermath of a death, with emotions and passions running high, sometimes the trustee might not act as the creator of the trust had originally intended. When this happens, intended beneficiaries do have recourse.
As part of their estate planning, some couples or business partners choose to draw up and sign agreements which establish “community property.” This is the case in about ten states, one of which is California. These are known as “the community property states.”
In these states, courts consider what each individual spouse earned during the legal course of the marriage as his or her distinct property. Some choose to pool these assets, but other couples are content to follow legal established practices. Community property can include the content of bank accounts, investments, and ownership in businesses. Both spouses are in full control of not only their own property and earnings, but also his or her fifty percent of the community property.
In states which are not community property states, protection is provided to the surviving spouse. This is to prevent a husband and wife who may not have had a source of income from becoming destitute upon the death of the providing spouse, especially if children issued from the marriage. In these states, surviving spouses have the legal right to claim one half or one third of the entire estate, depending on local laws.
This only takes place, however, if the surviving spouse—especially in the event of multiple marriages—is content with what has been provided to him or her. The surviving spouse must go to court in order to stake out his or her inheritance rights. In other words, these rights are not automatically considered by the court; the arrangements must be formally contested.
That is why it’s vital to update end of life planning and legal documentation in the event of divorce and remarriage. The majority of states deem an official divorce as a mechanism to “disinherit” the surviving spouse, even if he or she is specifically named. An updated will which formally revokes the previous one can enforce this. Whether or not the grantor remarries, an ex spouse does not stand to inherit in this case.
Many people may be surprised to learn that when a person dies, his or her children do not immediately stand to inherit. However, in some states, children do have the right to claim certain assets such as real estate.
Check to see if your state has laws which protect children against what is known as “accidental disinheritance.” This applies to children who are born after a parent dies. The child may be conceived, but not known to a father at the time of death. Alternatively, a parent might be aware of an unborn child, but dies before his or her arrangements have been altered to include him or her. Or a child might be born, but the parent has neglected to update his or her will to specifically include him or her. Courts can redistribute assets on the assumption that the deceased person did not intend to leave out an unborn or youngest child.
Some states also expand the definition of “accidental disinheritance” to include grandchildren. In some cases, a parent or grandparent may honestly desire to disinherit a child or grandchild, either due to family disputes or the breaking of an agreement. The best way to avoid application of accidental disinheritance laws is to specifically exclude by name those who you do not wish to inherit.
Founded in 1975 by L. Rob Werner and serving California for over 48 years, our dedicated attorneys are available for clients, friends, and family members to receive the legal help they need and deserve. You can trust in our experience and reputation to help navigate you through your unique legal matters.
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