Expert: Janet Brewer - 10/31/2009

Question
1. Please explain what a remainder beneficiary is.
2. Can the beneficaries of a trust be told what fee the trustee is charging for administering the trust? When I asked, I was told that info was private and would only be disclosed in the final accounting.

Answer
This is a concept that took me quite some time to learn (not because it's a difficult concept, it's just somewhat difficult to explain).  Suppose you own a piece of real estate.  Under the law, you have all of the rights to it - to live in it, to rent it out, to sell it, etc.  There are a variety of ways you can split up your rights - for example, if you rent it to someone, you give up your right to live in it while it's rented out.

Among the ways you can give up your rights to part of the property is by giving someone the right to live in it for as long as that person is alive.  We call that a "life estate".  In some ways, you can think of it as a really, really long rental period.  But, of course, it's impossible to say how long that "life estate" might last - the person could get hit by a bus the following day & the life estate would come to an end.  Or the person could live to be 100.

To carry this analogy along, let's assume that when you're 90 you give a 20 year old a life estate.  Unless tragedy strikes, you're going to be long gone before the life estate ends.  So what happens to the house then?  Who owns it?  Certainly someone does, right?  The person who has the life estate only has the right to the house as long as s/he's alive.  What then?  What do your heirs inherit (if anything)?

Well, they inherit the right to have the house AFTER the end of the life estate.  And that right is called a "remainder interest".  And the person who owns the remainder interest is called a "remainder beneficiary" or a "remainderman" - it's the person (or people) who get the property after the life estate ends.

Hope that wasn't too long winded.

As for question #2, I don't know what planet the trustee is living on, but that information certainly should be disclosed to the beneficiaries long before the final accounting.  If the trustee is being cagey, you might have to take him/her to court and have a judge compel him to keep the beneficiaries informed.

Hope this helps.

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