You clearly have a good understanding of the rules governing how your
stepmother can use the trust if she is the trustee. The particular
rules governing your rights as a beneficiary will depend upon the
state in which the trust is established. However, it appears common
that state laws permit beneficiaries to request an accounting from
trustees. You are classified as a "remainderman."
One way to ensure you would have access to the trust's accounts and
could influence its investing decisions would be to have your father
appoint you as trustee or co-trustee. Alternatively, your right to
receive accounts of the trust could be incorporated into the trust
document.
For a comprehensive answer addressing the specific laws of your state,
I encourage you to contact an attorney that specializes in estate
planning. I hope that the sources I have provided you below give you
considerable insight into your question, however.
Sincerely,
Wonko
Sources:
"A person or an organization who is entitled to benefits from the
trust principal after the income beneficiary's interest terminates is
called a 'remainder beneficiary' or 'remainderman.'"
"Accountings. The trustee shall provide trust accounting to the
beneficiaries and/or the probate court, as provided with the trust
instrument or under applicable state laws."
"Understanding the Uses of Trusts in Estate Planning"
http://72.14.203.104/search?q=cache:0MH--L7xMugJ:www.401krollover.com/General%2520on%2520Trusts.pdf+remainderman+%22bypass+trust%22+accounting+trustee&hl=en&gl=us&ct=clnk&cd=11
"Because each irrevocable trust is a separate taxpaying entity and
because the Trustee has responsibilities to both the income
beneficiaries (usually the surviving spouse and sometimes other
members of the family) and the remaindermen (those who will receive
the property on termination of the trust), careful records must be
kept of the transactions of each trust that has become irrevocable.
For more information on that record-keeping, see Record Keeping and
Accounting in Duties of the Trustee below."
"The Trustee is usually required to furnish the beneficiaries of a
trust an annual accounting of his or her actions and, absent a
provision in the trust waiving any duty to account (which would be
foolhardy), the law allows a beneficiary to require a Trustee to
furnish him/her with report of the activities of the trust. A proper
accounting shows the starting balance of the trust assets (at
inception or at the end of the last accounting period), adds the
receipts and gains and deducts the distributions, losses and
disbursements and then shows the remaining balance on hand at the end
of the accounting period. The starting and closing balances will
generally be at the "carrying value" of the trust assets which is most
often their income tax basis. California law also requires the account
to show the market value of the trust assets so that the investment
decisions of the Trustee can be more accurately measured."
"Trust at Death" by Valerie J. Merritt, Attorney at Law (2006)
http://www.merrittlaw.biz/sub/index.jsp;jsessionid=4E5927BAAE4FFDF8BA80C7AB5A271D26?contentid=m0NdvShgQd3nULXJGeQd58pX
"2.1.2. Duty to Keep Beneficiaries Informed. Texas common law has long imposed a
?duty of full disclosure? on trustees. See Huie v. DeShazo, 922 S. W.
2d 920, 923 (Tex. 1996), and Montgomery v. Kennedy, 669 S. W. 2d 309,
313 (Tex. 1984 -- trustees owed ?a fiduciary duty of full disclosure
of all material facts known to them that might affect [the
beneficiary's] rights?). However, the Trust Code has no provision
addressing this general duty. (It has Section 113.151, requiring a
trustee to respond to an accounting demand, but it does not address
the affirmative duty of a trustee to keep beneficiaries reasonably
informed.) HB 1190 adds new Section 113.060, which is taken from the
UTC and provides that a trustee has a duty to keep beneficiaries
reasonably informed concerning the administration of the trust and the
material facts necessary for the beneficiaries to protect their
interests.
This is a mandatory (non-waivable) duty for trustees with respect to
beneficiaries 25 years of age and over who are either (a) entitled or
permitted to receive current distributions or (b) ?first tier?
remaindermen. In a compromise with TBA, the settlor is permitted to
waive this duty with respect to
beneficiaries under age 25. However, an income beneficiary or ?first
tier? remainderman under age 25 still can demand an accounting under
Section 113.151, assuming he or she finds out about the existence of
the trust."
"2005 Texas Legislative Update" http://www.texasprobate.com/05leg/2005legupdate.pdf
"Trust beneficiaries are entitled to an accounting on demand, 12
months after creation of a trust and every year thereafter."
"Wills and Trusts" (Spring 2001)
http://www.studentweb.law.ttu.edu/lcs/Outlines/01%20Shannon%20Wills.doc
"The surviving spouse can be given a number of powers over the assets
in the bypass trust without having the assets taxed in her estate upon
her death second. For instance, she can have the right to all income
from the trust, the right to dip into principal for necessary living
expenses, and the power to appoint all or part of the assets in the
trust at her death to the children, to charity or to other
beneficiaries (so long as she does not appoint it to herself or her
creditors).
She can also act as a trustee or co-trustee and have a say in
investment decisions. If a bank, adult child or someone else acts as
trustee, then the trustee can be given broad powers to make
distributions for the surviving spouse. However, if the surviving
spouse is the sole trustee, then he or she may make distributions
solely for necessary medical, living and educational expenses."
"Using a Bypass Trust to Save Death Taxes - 2005" by Rees C. Johnson,
Attorney at Law (2005) http://www.rcjlaw.com/usingaby.htm
" To qualify for bypass treatment beneficiary interests in the trust
must be limited. Beneficiaries can have the income of the trust, any
additional amounts required for health, support, education and
maintenance, the greater of $5,000 or 5% per year of the trust
principal, and a limited right to select remainder beneficiaries. If
more flexibility is needed an independent trustee or a
remainder-beneficiary cotrustee can be used to provide additional
amounts from the trust corpus."
"The Credit Shelter Trust" http://familyestate.com/main/exemption.html
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