Introduction

Trust beneficiaries in New York often rely on their trustees to provide them with information about the trust and its finances. In some cases, trustees may refuse to share important details or withhold distributions from beneficiaries. This article explores the legal avenues available to trust beneficiaries in New York to challenge uncooperative trustees and ensure their rights are protected under the Surrogate's Court Procedure Act (SCPA) and Estates, Powers and Trusts Law (EPTL).

1. Beneficiaries Have A Right to Know How the Trust is Being Administered

In New York, trust beneficiaries have a legal right to be informed about the trust's affairs. The SCPA and EPTL provide the foundation for this right:

a.  SCPA § 2307: This provision requires trustees to file annual accountings with the Surrogate's Court, which must include a detailed report of the trust's finances and activities during the accounting period.

b.  EPTL § 7-1.12: This statute entitles beneficiaries to receive a copy of the trust instrument and information about the trust property, transactions, and finances.

If a trustee refuses to provide information about the trust or its finances, a beneficiary can take legal action by petitioning the Surrogate's Court to compel the trustee to provide the necessary information.

2. Challenging Trustees Who Withhold Distributions

When trustees fail to provide beneficiaries with their entitled distributions, beneficiaries have several options to protect their rights:

a.  Request an accounting: Beneficiaries can request a formal accounting from the trustee, which details the trust's financial transactions, including any distributions made. If the trustee fails to comply with this request, the beneficiary can petition the Surrogate's Court to compel an accounting. If the court grants the petition, the trustee will be compelled to submit an accounting and may face substantial penalties and surcharges for failing to comply with their fiduciary duties.

b.  Seek removal of the trustee: In extreme cases where the trustee's actions are deemed harmful to the trust or the beneficiaries' interests, beneficiaries may petition the Surrogate's Court for the removal of the trustee pursuant to SCPA § 719. The Surrogate's Court can remove trustees for various reasons, including the failure to distribute trust assets according to the terms of the trust, mismanagement of trust assets, self-dealing among other reasons.

c.  File a lawsuit against the trustee: In some cases, beneficiaries may have grounds to file a lawsuit against the trustee for breach of fiduciary duty if the trustee has failed to act in the best interests of the trust and its beneficiaries.   If a beneficiary believes they are not receiving their rightful distributions, they can also petition the Surrogate's Court to order the trustee to make the appropriate distributions. If the court finds that the trustee has breached their fiduciary duties, it may order the trustee to make the required distributions and potentially impose.

2.  Legal Representation and Assistance

Beneficiaries who are facing uncooperative trustees should consider seeking the advice of an experienced trust and estate attorney. An attorney can help navigate the complex trust laws in New York, represent the beneficiary's interests in court, and provide guidance throughout the process. 

CONCLUSION

Beneficiaries in New York have rights under SCPA and EPTL to access information about the trust and its finances, as well as to receive distributions from the trust. When trustees refuse to provide information or withhold distributions, beneficiaries can pursue legal remedies to protect their interests. By understanding their rights and seeking professional legal assistance, beneficiaries can ensure they receive the transparency and fairness they deserve.