Who is owed trustee duties before and after the settlor dies?
Key takeaway
Practitioners describe a successor trustee taking over asset management and making distributions for a grantor's benefit during the grantor's incapacity. Practitioners distinguish administration after death, when the trustee administers and distributes under the trust terms, from the trustee's role during incapacity, when the trustor is the person who benefits.
Duties during revocability
Utah places beneficiaries' rights under the settlor's control while the trust is revocable and the settlor has capacity. The trustee's duties in Utah are owed exclusively to the settlor under those conditions.
Under Uniform Trust Code section 1009, the approval of the settlor of a revocable trust binds all beneficiaries. Approval by the holder of a presently exercisable withdrawal power is described as binding all beneficiaries as well.
Accounting for administration before death
A New York County Supreme Court held that a remainder beneficiary generally lacked standing to compel an accounting for a revocable trust's administration before the settlor's death. The holding concerns the remainder beneficiary's standing to compel that accounting.
Beneficiary status after death
A federal court determined under state law that a son's beneficiary interest in a trust vested at his father's death. The son requested the revocable trust's tax returns after his father's death and was a beneficiary under state law at the time of the request.
Practitioners describe court approval for a guardian's modification when the settlor is incapacitated.
Notice to beneficiaries
Utah gives a trustee 60 days after learning that an irrevocable trust was created or a revocable trust became irrevocable to notify qualified beneficiaries. A revocable trust becoming irrevocable through the settlor's death falls within Utah's notice provision.
Pennsylvania gives a revocable trust trustee 30 days after learning that the settlor has died to send the statutory notice.
Section 813(b) provides for notification of qualified beneficiaries within sixty days after the trustee acquires knowledge that a revocable trust has become irrevocable because of the settlor's death.