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When a beneficiary is occupying trust property, it’s important to know whether the beneficiary has the right to do so under the trust agreement or not. The trust document will say if a beneficiary is entitled to possess such property, how long, and who pays for the maintenance and other discretionary expenses while such beneficiary is in possession. If the trust document silent, there is room for interpretation, and in case of conflicting interpretations between the beneficiary and the trustee, the beneficiary can petition the court for an interpretation.
Beneficiary’s Legal Possession of Trust Property
It is quite common for beneficiaries to be granted lifetime use of a property. In fact, this is often the case for families where the surviving spouse is granted the lifetime use of the house, and upon the surviving spouse’s death, the house is to be sold and distributed to the children. Although the usual set-up is for the occupant of the house to pay for maintenance fees and taxes, the trust document can state otherwise. If there is any doubt, it is important to refer to the trust document to see the grantor’s intentions regarding the property.
Beneficiary’s Illegal Possession of Trust Property
If the beneficiary was not granted possession over the trust property but is still occupying the property rent-free, the trustee has the obligation to take legal action for the benefit of the trust. This legal action can be either in the form of the execution of a lease agreement or an eviction proceeding. The execution of a lease agreement will allow the trustee to collect rent from the beneficiary for the benefit of the trust. In case the beneficiary does not want to pay rent, the trustee can evict the beneficiary so it can lease the property to a third person, also for the benefit of the trust.
When the beneficiary illegally possesses trust property and the trustee is constrained to take legal action using the services of an attorney, the trustee may offset the amount of legal fees with the beneficiary’s distribution. In case the beneficiary contests the offsetting of the attorney fees, the trustee can request the court to rule on the matter.
Trust matters can be complex especially when conflicts on interpretation of the trust document arise. Should you need assistance in interpreting trust documents, we at the Law Offices of Albert Goodwin are here for you. We have offices in New York City, Brooklyn, NY and Queens, NY. You can call us at 212-233-1233 or send us an email at [email protected].
About the Author
Albert Goodwin Esq. is a licenced New York attorney with over 17 years of courtroom experience. His extensive knowledge and expertise make him well-qualified to write authoritative articles on a wide range of legal topics. He can be reached at 212-233-1233 or [email protected].
