We have used the term abused beneficiary for many years now. When we refer to an abused beneficiary, we mean a Trust or Will beneficiary that has been denied their rightful inheritance in some fashion. There are two main types of abused beneficiaries, which we refer to as vested and non-vested beneficiaries.
Vested Beneficiaries: Recognizing and Addressing Their Rights
Vested beneficiaries are those people who are named in a Trust as a beneficiary, they have not been completely disinherited. However, for some reason the abused vested beneficiary has not received their rightful share of the Trust. For example, if you are a beneficiary and you’re entitled to $1 million from the Trust estate, but the Trustee refuses to pay it out to you. This can happen for any number of reasons. Such as the Trustee believing that you are not wise with money so the Trustee wants to keep your money for you even though the Trust terms do not allow for that.
Perhaps the Trustee simply wants to keep the money so they can use it on themselves. Or maybe the Trustee is pulling a power play and withholding the money to punish a sibling the Trustee does not like. In all of these cases, the beneficiary is being abused. If a beneficiary is entitled to an outright distribution of assets, then that distribution must occur within a reasonable time. Withholding Trust distributions for any reason, or no reason at all, is an abuse of the Trust terms and an abuse of the Trust beneficiary.
A Trust beneficiary can also be abused where a Trustee charges excessive Trustee fees, incurs unreasonable Trust expenses, or hides Trust assets and refuses to account or share Trust financial information with the beneficiary. Each of these cases represents substantial abuse of the Trust beneficiary and can result in the beneficiary receiving far less than they are otherwise entitled.
Non-Vested Beneficiaries: The Impact of Disinheritance
Non-vested beneficiaries refer to people who have been disinherited from a Trust or Will completely. This is especially egregious when a person is disinherited at the last moment before a parent dies. For example, where three children were going to share the estate equally, but a last-minute change gives the entire estate to one child. The same can happen when a bad actor intercedes in an elder’s life and changes the Trust or Will to leave the bad actor the entire estate.
Anytime a Trust or Will, or Trust or Will amendment, is highjacked to improperly leave assets to a bad actor, this is beneficiary abuse. To properly leave assets, the elder must have their own, independent intent to do so. If a parent disinherits and child on purpose, because they intend to do so, then that is not abuse. But when a child is disinherited because a bad actor exerted undue influence on the elder, or had the elder sign something when the elder lack capacity, that’s abuse.
Unfortunately, both types of beneficiary abuse happens more often than you might think. And many people who suffer abuse don’t fully appreciate they are being abused. They might think something is wrong, but they don’t see themselves as they truly are: abused beneficiaries. Anytime your rightful inheritance is taken, hidden, or kept from you, you are an abused beneficiary.
Abused beneficiaries have many rights under California law. If you find yourself in an abusive Trust situation you must get help quickly so you don’t become a permanent victim of Trust and Will abuse.
