Right to Financial Information

We often are asked by one family member, who may a beneficiary of a parent’s trust (or will), what rights does that family member have when Mom or Dad is still alive and another family member has a power of attorney and/or is the trustee of the surviving parent’s trust. This usually arises because one family member may be suspicious of another family member’s management of the parents’ affairs and the “manager” may be less than forthcoming. While Mom or Dad is still alive (but the estate is managed by a trustee or via a power of attorney), are sibling beneficiaries entitled to demand an account of, and other financial information about, their parents’ estate’s assets and/or the management of same?

Short Answer: With revocable trusts (that is, most family or living trusts), except to the extent that the trust instrument otherwise provides or where the joint action of the settlor and all beneficiaries is required, the beneficiary does not have the statutory rights otherwise afforded beneficiaries during the time that the trust is revocable and the person holding the power to revoke the trust is competent.

This issue is governed by Probate Code section 158000, which provides as follows:
“Except to the extent that the trust instrument otherwise provides or where the joint action of the settlor and all beneficiaries is required, during the time that a trust is revocable and the person holding the power to revoke the trust is competent:

(a) The person holding the power to revoke, and not the beneficiary, has the rights afforded beneficiaries under this division.

(b) The duties of the trustee are owed to the person holding the power to revoke.”
Generally, a trust beneficiary may petition the probate court regarding matters affecting the internal affairs of a trust, unless the trust instrument expressly withholds authority to proceed. Among other powers, the court has jurisdiction (1) to interpret the terms of the trust, (2) to determine the existence or nonexistence of any power, privilege, duty or right, (3) to instruct the trustee, and (4) to compel the trustee to report information about the trust or account to the beneficiary. (§ 17200, subds. (b)(1), (2), (6), (7); Estate of Heggstad (1993) 16 Cal.App.4th 943, 951–952, 20 Cal.Rptr.2d 433.)

However, section 15800, above, postpones the rights of trust beneficiaries “during the time that a trust is revocable and the person holding the power to revoke the trust is competent.”
As mentioned, a trust beneficiary’s rights are very limited as long as the trust is revocable (that is, can be changed) and the person holding the power to revoke the trust (that is, Mom or Dad or even a conservator, under certain circumstances—See Johnson v. Kotyck (1999) 76 Cal.App.4th 83, 91, 90) is competent.

So what is a beneficiary to do? First, determine whether the trust can be changed (most family or living trusts can); second, is Mom or Dad competent? The first issue may be difficult to determine without reviewing the trust. However, as mentioned, because most trusts are revocable, the beneficiary should proceed as if the trust were revocable. The second issue is the more problematic—determining a parent’s competency. You should consult with an attorney to assist on this issue.

DISCLAIMER: This entry does not give specific legal advice about your specific legal problem. No text or graphic contained in this entry is to be or should be used or relied upon as legal advice. This entry does not create an attorney-client relationship. If you want specific legal advice about your particular legal issues, or if you want to create an attorney-client relationship, you need to retain the Law Offices of Ron A. Stormoen by a signed written retainer agreement.