Trust Beneficiary Rights in Michigan: What You Should Know

When it comes to trusts and estate planning, it is essential that you understand your rights as a trust beneficiary. Trusts are powerful tools that safeguard assets, fulfill the wishes of the trust creator (grantor), and provide financial security to loved ones. 

At Bassett Murray Law Group, we’ve been guiding Michigan families through the trust administration process for over 30 years. In this article, we’ll break down what you need to know about trust beneficiary rights in a straightforward and approachable way.

Types of Trusts in Michigan

The type of trust you’re dealing with plays a big role in defining your rights as a beneficiary. Here are the most common types of trusts in Michigan:

Revocable Trusts

These trusts can be modified or revoked by the grantor during their lifetime. As a beneficiary, your rights are generally limited while the grantor is alive since they retain full control over the trust assets. However, once the grantor passes, the trust becomes irrevocable, and your rights to information, distributions, and accountability take effect.

Irrevocable Trusts

Unlike revocable trusts, irrevocable trusts cannot be changed once they are established. As a beneficiary, your rights are typically more substantial because the grantor relinquishes control of the trust assets. You are entitled to information and may receive distributions according to the trust terms.

Testamentary Trusts

These trusts are created through a will and only take effect upon the grantor’s death. Beneficiaries of testamentary trusts have the right to be informed about the trust’s creation and its terms once it becomes active during probate.

Each trust type comes with unique rights and responsibilities. Understanding these differences can help you feel more confident about your role as a beneficiary.

Key Rights of Trust Beneficiaries

Beneficiaries of trusts in Michigan are afforded several important rights under the law. Let’s explore these rights and what they mean for you.

Right to Information

As a beneficiary, you have the right to know what’s in the trust and how it’s being managed. Michigan law requires trustees to notify beneficiaries of the trust’s existence within 63 days after accepting their role. You should also receive a copy of the trust document and any amendments.

Checklist of Information You Should Receive:

• A copy of the trust agreement
• Contact information for the trustee
• An overview of trust assets
• Any changes or updates to the trust

Right to Accountings and Reports

Beneficiaries have the right to periodic updates about the trust’s financial activity. Trustees must provide detailed accountings at reasonable intervals, typically annually. These reports should include:

• A summary of income and expenses
• Asset valuations
• Details of distributions made to beneficiaries

If you’re not receiving regular updates, you can request an accounting to ensure the trust is being properly managed.

Right to Distributions

Your entitlement to distributions depends on the trust terms. Some trusts mandate regular distributions, while others leave it to the trustee’s discretion. This is referred to as mandatory or discretionary distribution.

• Mandatory Distributions: Specific amounts or percentages are paid out on a regular schedule.
• Discretionary Distributions: The trustee decides when and how much to distribute based on the trust’s guidelines.

Understanding the trust’s distribution terms can help you set clear expectations.

Right to Proper Trust Management

Trustees have a legal obligation called a fiduciary duty to act in the best interests of the beneficiaries. This includes:

• Acting loyally and impartially
• Protecting and prudently managing trust assets
• Avoiding conflicts of interest

If you suspect the trustee is mismanaging the trust or failing in their duties, you have the right to raise concerns and seek legal recourse.

Right to Challenge Trustee Actions

If you believe the trustee is not acting in your best interests, you can take legal action. Common reasons to challenge a trustee include:

• Mismanagement of trust assets
• Breach of fiduciary duty
• Failure to provide required information or accountings

Beneficiaries can petition the court to remove a trustee or request an order to compel proper management of the trust. While pursuing legal action can be costly, it may be necessary to protect your interests.

Additional Rights

Beneficiaries also have:

• The right to be notified of probate proceedings if the trust is linked to a will.
• The right to clarify specific entitlements from the estate.
• The right to be informed of trust litigation that could impact their share.

Understanding these additional rights can help you stay proactive and informed about the trust’s status.

Special Considerations

In addition to the beneficiary rights mentioned above, there are a few more factors that are important to consider.

Current vs. Contingent Beneficiaries

Not all beneficiaries have the same rights. Current beneficiaries (those actively receiving benefits from the trust) typically have greater access to information and distributions than contingent beneficiaries (those whose rights depend on a future event).

Communication with the Trustee

Maintaining open and respectful communication with the trustee can help resolve many issues without legal intervention. However, if disputes arise, consider seeking legal advice to understand your options and next steps.

Role of the Trust Document

The trust document is the ultimate guide to your rights and the trustee’s responsibilities. Carefully reviewing this document can help you understand what to expect and identify potential issues.

Protecting Your Rights: Contact Bassett Murray Law Group Today

Understanding and protecting your rights as a trust beneficiary is essential. At Bassett Murray Law Group, we’re committed to helping you work through the trust administration process with clarity and confidence. With decades of experience in estate planning and trust administration, we’ve built a reputation for providing guidance that brings our clients peace of mind.

If you’re a trust beneficiary in Michigan and have questions or concerns, reach out to us today. Call us at 734-930-9200 for our Ann Arbor office or 231-427-2292 for our Petoskey office. You can also visit our Contact Us page to schedule a consultation. Let’s work together to ensure your rights are protected and your future is secure.