Estate planning can be a touchy subject for most, but it is absolutely essential for the preservation and guidance of generational wealth. People generally have the freedom to craft an estate plan with nearly any specifications as to who receives – or in some cases, doesn’t receive – an inheritance when the time comes. Those who are set to inherit from an estate are generally referred to as beneficiaries. Have you ever considered just what beneficiaries can and cannot do? What information, if any, are beneficiaries entitled to? As further discussed in this article, beneficiaries possess certain rights as it relates to an estate, but it is important to know what sort of rights a beneficiary has in a particular estate plan and ultimately when those rights come into effect.

Before Death

            Generally, while the creator of a Last Will and Testament or a Revocable Living Trust is alive a beneficiary named in those documents is not afforded many rights. For instance, a Last Will and Testament does not become effective until the death of its creator. Therefore, suppose your mother named you as a beneficiary in her Last Will and Testament. During her lifetime, even as a named beneficiary, you would not have a right to information on the document or even to demand that your mother handle her assets a certain way. Essentially, any rights that you might have as a beneficiary would not kick in until after your mother’s death, in this instance. In fact, before her death, your mother would have the right to do as she wished with her property, even sell, lease, or destroy it.

            The same could be said about a Revocable Living Trust. Some people like to establish a Revocable Living Trust to hold their assets during their lifetimes. Revocable Living Trusts can be used for a number of reasons, but a common use is as a tool to avoid probate. Given the fact that probate administration can take a lot of time and could generally be costly, planning ahead to reduce – or eliminate in some cases – the need for your estate to pass outside of probate is very useful. Assets held in a Revocable Living Trust pass to beneficiaries outside of the probate process, which makes it a desirable option for those seeking to save on the costs associated with estate administration after death. If you are named to receive distributions from a Revocable Living Trust after the creator of that trust passes away, just as in the instance of a Last Will and Testament discussed above, you are not even entitled to a copy of the Revocable Living Trust because the instrument itself is always subject to change before the creator’s death.

            After the death of the creator of these estate planning instruments, however, it is important to know that beneficiaries have substantial rights as it pertains to either the administration of the deceased’s estate or the administration of the deceased’s trust. For example, if someone were to pass away owning assets, it is most likely that the deceased’s assets will need to go through probate before a distribution of those assets may be made to beneficiaries. In a probate proceeding, beneficiaries are afforded a slew of rights such as:

  • The right to receive notice of the probate proceedings.
  • A right to an inventory and accounting of the probate estate.
  • A right to receive a copy of the decedent’s Last Will and Testament, if any.
  • An opportunity to object to petitions presented to the probate court.

Similarly, when the creator of a Revocable Living Trust, as described above, passes away, that Revocable Living Trust converts to what is known as an Irrevocable Living Trust. With an Irrevocable Living Trust, the terms of the document, generally, cannot be changed. Therefore, whomever has been named as a beneficiary of the Irrevocable Living Trust likely cannot have that designation modified and their interests are locked in at that time. At such a time, the beneficiaries are granted certain rights including a right to an accounting of the trust’s assets and a right to be provided a copy of the trust instrument. Please note that other rights may be spelled out in the trust instrument itself such as rights pertaining to the appointment of a Trustee, as an example. If you are a beneficiary to a trust, it would be of benefit to you to meet with a qualified estate planning attorney to analyze and summarize your rights under the trust instrument, if any.

Financial Institutions

            It is common for people in their estate planning processes to designate beneficiaries to their financial accounts. This could be accomplished by following your bank’s procedures on naming a beneficiary or having a Payable on Death (POD) account. The beauty of naming a beneficiary on a financial account is that it allows the funds in said account to pass to the beneficiary without the need to first go through probate. Also, under these circumstances, a beneficiary named on a bank account, has the right to receive the funds within said account upon the death of the owner directly. In fact, financial institutions likely will not disburse funds held in an account with a named beneficiary unless it is the named beneficiary making the request. If you are wondering if naming a beneficiary on your financial accounts will make sense in your situation, it would be important for you to get in touch with an experienced estate planning attorney.

Conclusion

            As you can see, as a beneficiary, you may have substantial rights to information depending on the circumstances you fall under. Regardless of your situation, if you are concerned about what your rights are as a beneficiary, it could prove useful to sit down with a qualified estate planning and probate attorney to fully explain your options when it comes to your role as a beneficiary. Ultimately, you may have particular rights to a loved one’s estate and having a qualified attorney on your side can ensure that you are being afforded all the rights owed to you. If you have any questions or need assistance setting up your estate plan, we encourage you to give The Probate Law Firm a call at 305-456-3255.

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