Administering a trust in California consists of multiple steps that can take months, or even years (depending on the nature and complexity of the trust assets). Here is what you can expect with obtaining financial information to determine the value of your share of trust assets, and how long it may take to finally receive your inheritance.
Obtaining the Trust
First, the trustee must notify the beneficiaries and heirs of the existence of the trust and provide copies of the trust document to the heirs and beneficiaries. When the trustee sends the initial statutory notification pertaining to the existence of the trust, the trustee is not yet required to provide financial information. Most trustees do not provide financial information about the trust assets with the notification and trust document, as financial information must still be gathered. The beneficiaries have a set legal/statutory period to object to the validity of the terms of the trust (120-days from mailing of the notification) by filing a Petition to Contest the Trust in probate court based on undue influence, lack of capacity, or fraud. During the 120-day time frame, the trustee might wait to begin the process of gathering financial information about the trust assets to ensure no lawsuit is filed.
Trustee Must Obtaining Financial Information
After the trustee formally notifies the heirs and trust beneficiaries about the trust (and provides copies), the trustee will begin gathering financial information about trust assets. The trustee will first need to show proof to banks and financial institutions, as well as file forms with the county recorder’s office, to prove they now have legal authority over each individual trust asset. This process can take some time, but the trustee is required to be communicative about the status.
If there are real properties in the trust, the trustee must file change of ownership forms with the county recorder’s office. Once the trustee has established access and legal authority over each trust asset, the trustee can begin the work of obtaining appraisals (which can take months) for real properties (if any). The trustee may need to evict current tenants (if the trust property needs to be sold) per the trust terms, which can also take several months. The trustee may need to make repairs to real properties or may remodel or improve the properties to increase property value. Depending on the terms of the trust, the trustee may need to retain specific properties in trust for rental income or may need to sell the properties.
If there are other more complex, less liquid assets (such as businesses), it may take some time for the trustee to obtain and provide a full valuation of the assets to the beneficiaries, and even longer for the trustee to liquidate those assets and distribute the proceeds to the beneficiaries in accordance with the trust terms. Trust beneficiaries can expect the process to take at least a year, perhaps longer. The bottom line is that the trustee must communicate with the beneficiaries with status updates and provide financial information on request as it becomes available.
Trustee Must Provide Financial Information to the Beneficiaries
Trust beneficiaries are entitled to financial information, and even a more formal trust accounting, upon reasonable request. The trustee is required to communicate with the beneficiaries about the status of the trust administration. If an unreasonable amount of time has passed since the trust administration process began, and the trustee refuses to communicate or provide status updates, the beneficiaries may need to request either an informal or formal (court-ordered) trust accounting from the trustee. Beneficiaries are entitled to financial records (such as bank statements, real estate closing statements, etc.) upon reasonable request. If a beneficiary believes there are problems with the accounting or financial information provided by the trustee, they may consider consulting with an attorney about filing a petition in court for a formal court-ordered accounting.
We have free courses on trust accountings HERE. Beneficiaries can ask the trustee for financial records and/or an informal accounting. It is best to communicate with the trustee in writing. In the context of trust accountings, an “informal” accounting simply means a basic financial statement listing values of trust assets and liabilities, which is not court-ordered. A “formal” accounting is court-ordered and approved by a judge. For additional information, see How to Demand a Trust Accounting.
Trustees who Withhold Financial Information
If the trustee is unresponsive to reasonable requests for financial information, the beneficiaries may need to hire an attorney to file a Petition in probate court for a formal (court-ordered) trust accounting, which is a lawsuit against the trustee. If a lawsuit is filed, the beneficiaries gain the power to subpoena financial records directly from banks and institutions (if there is concern the trustee is not providing accurate information). If a lawsuit is filed, the beneficiaries also gain the power to conduct legal discovery and the trustee is legally obligated to respond in a truthful and timely manner.
Trustees who Mismanage or Steal Trust Assets
If the beneficiaries discover the trustee has done anything improper or misrepresented the trust’s finances to the beneficiaries, the beneficiaries may have legal recourse by filing a Petition with the probate court based on trustee breach of fiduciary duty (if there has been misappropriation or mismanagement), and/or a Petition to force the trustee to distribute the trust assets to the beneficiaries. If you believe you need to file a lawsuit against a trustee in California, contact Albertson & Davidson, LLP for a free case consultation.
The bottom line: trust beneficiaries are legally entitled to financial information about their inheritance assets. It may take some time for the trustee to gather this information and to sell assets such as real properties, but the trustee should be communicating with the beneficiaries regularly. If beneficiaries have concerns about the trustee mismanaging the trust assets, or the trustee is refusing to distribute a rightful inheritance in accordance with the trust terms, contact a trust and estate litigation attorney as soon as possible.
