Understanding the Rights of Beneficiaries of a Trust

When someone creates a trust, they name one or more beneficiaries to receive income, principal, or other benefits from the trust. But what are the rights of a trust beneficiary? If you’ve been named as one—or if you’re establishing a trust and want to ensure beneficiaries are properly protected—it’s important to understand the legal framework that governs those rights.

Beneficiaries are not merely passive recipients. They have defined legal rights and protections that require the trustee to act in their best interests and to follow the terms of the trust document. These rights are rooted in both state law—typically the law of the state where the trust is established or the jurisdiction specified in the trust—and in the trust instrument itself.

A well-drafted trust can provide additional layers of protection beyond what the law requires. This helps ensure that the intent of the grantor (the person who created the trust) is carried out with diligence and care. The trust document can include specific provisions that clarify the scope of the trustee’s duties, outline the rights of beneficiaries, and include safeguards tailored to the grantor’s goals.

Some trusts are designed to protect beneficiaries from unforeseen circumstances, such as creditor claims or financial mismanagement. Others may impose certain restrictions—such as delayed distributions or conditional benefits—in order to guide or protect vulnerable beneficiaries, including minors or individuals with special needs. In all cases, aligning the trustee’s responsibilities with the best interests of the beneficiaries is a core principle of trust law.

Basic Rights of Trust Beneficiaries

The core principle behind the rights of beneficiaries is accountability. Trustees—those who manage the trust—are fiduciaries, meaning they are legally obligated to act in the best interest of the beneficiaries. The law provides several rights to ensure beneficiaries can monitor and, if necessary, challenge how a trust is administered.

The Right to Information

Perhaps the most fundamental right a beneficiary has is the right to be reasonably informed about the trust and its administration. This includes:

• A copy of the trust document or relevant portions of it.
• Knowledge of their status as a beneficiary and the nature of their interest (e.g., income beneficiary or remainder beneficiary).
• Regular accountings or financial reports showing trust assets, income, expenses, and distributions.
• Information about any changes in the trust’s assets or investments.

Beneficiaries do not always receive every detail about the trust, especially if they are contingent (i.e., their interest depends on a future event). However, current beneficiaries typically have a strong right to transparency.

The Right to Timely Distributions

If a trust entitles a beneficiary to receive income or principal distributions, the trustee must make those distributions according to the trust’s terms. Trustees cannot delay or withhold distributions without valid legal or administrative reasons. If delays occur, beneficiaries may have the right to request an explanation or take legal action to compel payment.

The Right to Hold Trustees Accountable

Trustees must act prudently, avoid conflicts of interest, and manage trust assets with care. If a trustee breaches these fiduciary duties—whether through mismanagement, self-dealing, or failure to follow the trust’s terms—beneficiaries have the right to:

• Request removal of the trustee.
• Petition the court for an accounting or for corrective action.
• Sue for damages caused by the trustee’s breach of duty.

Trustees who fail in their obligations can be held personally liable. Courts take fiduciary breaches seriously because they can jeopardize the financial security of beneficiaries.

The Right to Petition the Court

In situations where disputes arise—over interpretation of the trust, the actions of a trustee, or the rights of various beneficiaries—any beneficiary can petition a probate or trust court to intervene. Courts can clarify ambiguous trust language, compel trustees to act, or even modify certain aspects of a trust in limited circumstances.

The Right to Be Treated Fairly

Trustees must act impartially if there are multiple beneficiaries. They cannot favor one over another unless the trust document explicitly allows it. For example, in a trust that provides income to one beneficiary and the remainder to another upon the first’s death, the trustee must balance generating income for the current beneficiary with preserving assets for the remainder beneficiary.

Types of Beneficiaries and How Rights May Vary

Not all beneficiaries have the same rights at the same time. The type of beneficiary you are affects your level of access and authority:

• Current (or income) beneficiaries are entitled to receive distributions right now. They have the strongest rights to information and oversight.
• Remainder beneficiaries will receive trust assets in the future, often after the death of a current beneficiary. Their rights are more limited but still important.
• Contingent beneficiaries only receive benefits if a certain condition is met (e.g., if a primary beneficiary dies first). Their rights are typically the weakest until the contingency occurs.

Regardless of category, all beneficiaries have a legal interest in the trust and can seek protection if the trust is being mismanaged.

FREE WEBINAR

5 Things to Know About

Estate Planning

When You Turn Sixty-Five

Save the Date

Friday, Nov 14^th at 2:30pm

Limitations on Beneficiaries’ Rights

While beneficiaries have meaningful rights, those rights are not unlimited. Trustees are granted discretion in many trusts—meaning they can decide how and when to make distributions. Unless that discretion is being abused, courts are generally reluctant to interfere with it.

Additionally, some trusts include provisions known as “spendthrift clauses,” which limit a beneficiary’s ability to assign their interest or have creditors claim it. These clauses protect the trust but can also restrict a beneficiary’s control over their expected inheritance.

What Beneficiaries Should Watch For

Beneficiaries should be proactive about protecting their rights. Some signs that something may be amiss include:

• Lack of communication from the trustee.
• Delayed or missing distributions without explanation.
• Unusual or excessive administrative fees.
• Transactions that benefit the trustee or seem to diminish trust assets.

If you notice any of these red flags, it may be time to request an accounting or consult a trust attorney to evaluate your options.

State-Specific Rules in New York

In New York, beneficiary rights and trustee duties are governed primarily by the Estates, Powers and Trusts Law (EPTL) and the Surrogate’s Court Procedure Act (SCPA). For example, under EPTL § 11-2.3 trustees must invest assets under the “Prudent Investor Rule,” and under SCPA § 2208 beneficiaries (and other interested parties) may demand an accounting. Trustees are also required to keep beneficiaries “reasonably informed” of the trust’s administration.

New York courts strictly enforce fiduciary duties. In Matter of JP Morgan Chase Bank, N.A. (Kyle), 2016 N.Y. Slip Op 00191, the Appellate Division underscored that beneficiaries may compel judicial accountings and challenge trustee decisions where fiduciary duties are breached or the trustee acts in bad faith. The case affirmed that even broad discretionary powers must be exercised consistently with the trust’s purpose and the beneficiaries’ interests.

State-Specific Rules in New Jersey

New Jersey follows its version of the Uniform Trust Code (UTC), codified at N.J.S.A. 3B:31-1 et seq., which defines trustee obligations and beneficiary rights. Trustees owe a continuing duty of loyalty, impartiality, and prudent administration, and under N.J.S.A. 3B:31-67 must provide beneficiaries with “reasonably complete and accurate information” about trust administration. Beneficiaries can seek annual accountings and petition the Superior Court, Chancery Division, to compel one if necessary.

In Tannen v. Tannen, 208 N.J. 409 (2011), the Court reaffirmed that beneficiaries of discretionary support trusts cannot compel distributions because they have no enforceable ownership interest in the trust property. This case illustrates how the courts balance a trustee’s discretion with a beneficiary’s expectation of benefit. Likewise, appellate cases such as In re Trust Under Article Third of the Last Will and Testament of Wu Huai Wen (N.J. App. Div. 2024) demonstrate how New Jersey courts review trustee discretion and uphold it when exercised in good faith and consistent with the trust’s terms.

Working with an Attorney

If you’re a beneficiary unsure of your rights—or if you’re concerned about how a trust is being handled—legal guidance can help. We often advise clients on their legal standing, how to request information, and when it’s appropriate to involve the courts. Beneficiaries should not feel powerless. The legal system provides tools to ensure trustees are acting responsibly and fairly.

Every state has different trust laws, and the terms of each trust vary. You may need to discuss this with an attorney licensed in your state.

Final Thoughts

Trust beneficiaries hold enforceable legal rights designed to protect them from mismanagement and ensure that a trust serves its intended purpose. Whether under the EPTL and SCPA in New York or the Uniform Trust Code in New Jersey, the law imposes strict fiduciary duties on trustees and gives beneficiaries the means to monitor, challenge, and enforce compliance. A clear understanding of these rights can make the difference between trust administration that works as intended and one that requires judicial intervention.