Who Gets to See a Trust After the Trustee Dies?
You've probably seen a movie or television interpretation of "the reading of the will" when family and friends crowd an attorney's office after someone dies. Unfortunately, this is purely a theatrical device designed to create drama and tension within a fictional story. There's no legal requirement that a last will and testament or a revocable living trust be read to anyone.
Since they're not read out loud, you might be wondering where trusts are recorded. Trusts aren't public record, so they're not usually recorded anywhere. Instead, the trust attorney determines who is entitled to receive a copy of the document, even if state law doesn't require it. So, which beneficiaries have rights to the information in the trust?
Probably the most important interested party who must receive a copy of the trust is the person or entity named to serve as the trustmaker's successor trustee. The successor trustee is responsible for settling the trust and needs to review the document to determine beneficiaries and whether any special restrictions or instructions apply to their shares of the trust.
The successor trustee must also review all of the powers that they will have when settling the trust and what type of compensation they are entitled to receive in carrying out all of the fiduciary responsibilities involved.
All of the initially named beneficiaries are entitled to receive a copy of the trust. The document will help them understand what they're getting, how, and when they're getting the inheritance. Some beneficiaries may be entitled to an immediate and outright distribution or have the right to receive immediate income and principal from the trust.
State law will dictate if secondary beneficiaries—beneficiaries who will inherit property after the initial beneficiaries die—should receive a copy of the trust. If the beneficiary is a minor, then the beneficiary's natural or legal guardian may be given a copy of the trust on behalf of the minor.
Heirs and Prior Beneficiaries
In addition to the beneficiaries named in the trust, the attorney may choose to send a copy to the trustee's heirs at law who aren't named in the trust or to the beneficiaries named in a prior trust agreement, if one existed. If the trust attorney anticipates that a prior beneficiary will challenge the trust agreement's validity, state law will dictate a time restriction as to when a disinherited beneficiary can file a trust contest.
The accountant for the trust must receive a copy of the trust agreement to carry out any instructions to pay off debts of the trust and to make sure the successor trustee acts within their power to settle the trust. An accountant may also apportion estate and income taxes, allocate estate and trust income and principal, and determine when and if trust accountings need to be given to the trust's beneficiaries.
Personal Representative Named in the Will
If the trustee didn't completely fund the trust before death and a probate proceeding is required, the personal representative named in the trustmaker's pour-over will must receive a copy of the trust. The successor trustee and personal representative may not be the same person or entity, and they need to understand how they must work together to settle the trust and probate estate.
IRS and State Taxing Authority
Some states consider trust or probate assets to be taxable for federal or state estate tax purposes. If requested, a copy of the trust agreement must be submitted to the IRS or state taxing authority along with the estate tax return.
Trusts Are Not Public Record
Most states require a last will and testament to be filed with the appropriate state court when the person dies. When this happens, the will becomes a public record for anyone to read. However, trusts aren't recorded. Not having to file the trust with the court is one of the biggest benefits of a trust because it keeps the settlement a private matter between the successor trustees and trust beneficiaries.
Keep in mind that if someone challenges the trust in court, the trust document will inevitably become a public record because a copy of it will be attached to the court pleading. In certain circumstances, such as in the case of a famous or infamous trustee, the beneficiaries of the trust can request that the judge seal the court records to prevent the general public from viewing the trust and other court documents. However, the judge will grant this request only in rare situations.