I'm A Trust Beneficiary-What Disclosures Do I Receive?

Wyoming's version of the Uniform Trust Code limited the notification duties to qualified beneficiaries.  Qualified beneficiary means  (A)--"A beneficiary who is currently entitled to mandatory distributions of income or principal from the trust or has a vested remainder interest in the residuary of the trust which is not subject to divestment".  

Let's look at what this statute means.  (The statutory language is underlined in this article).  

The intention of the Wyoming statute accounts for situations in which it is proper to require notice to be given to a certain class of beneficiaries--those with mandatory interests, for example--without requiring a fiduciary to send notifications to beneficiaries with comparatively remote interests.  The duty is to give information to certain beneficiaries, in the form of valuation of trust assets, accountings, divestment of trust assets, and can include other information regarding assets of the trust.    The trust agreement must be reviewed to determine if there is a provision regarding a trustee's notification duties. 

In Wyoming, only the lifetime beneficiary, and not the remainder beneficiaries, is a qualified beneficiary entitled to receive reports from the trustee.  For example, consider a trust in which one person has a life interest, with or without mandatory income distributions with the remainder going to different persons.  Only the lifetime beneficiary is qualified to receive reports from the trustee.  

The Wyoming statutes further provide that if (B) If a trust has no qualified beneficiary under subparagraph "A" above, "qualified beneficiary" shall mean a beneficiary having a vested remainder interest in the residuary of the trust whose interest is subject to divestment only as a result of the beneficiary's death.   A vested remainder is the absolute right to receive title when a presently existing interest in real property ends.  It is certain to transfer after the existing interest expires, and is not dependent on any conditions or other events occuring.  

That means if you don't qualify as a beneficiary to receive notice under (A), you may qualify under (B).   

Next, Wyoming further refines the definition by providing (C) If a trust has no qualified beneficiary under subparagraph (A) or (B), above, "qualified beneficiary" shall mean a beneficiary currently eligible to receive discretionary distributions of income or principal from the trust, who has received one or more distributions during the beneficiary's lifetime.  

One Wyoming case, which concerned a QTIP (Qualified Terminable Interest Protective) Trust, concluded that a remainder beneficiary is not a qualified beneficiary of a trust because while a QTIP remainder beneficiary does have a vested interest, such interest is subject to divestment because the remainder must survive the life interest holder.  This reasoning would seem to be defeated if the trust provided for a second class of remainder beneficiary.  In other words, if the interest went from the qualified beneficiary to a remainder beneficiary, and on the passing of both of them, to the next generation or class of remainder beneficiary.  That is the similar to three generations:  the grandparent, or maker of the trust; their child(ren) as remainder beneficiary, and then grandchildren as the next group of remainder beneficiaries.  It seems the third generation would meet the requirement because they survived the other two generations.   However, the case was decided by the Wyoming Supreme Court in 2007 and the statutory provisions in this article were enacting by the Wyoming legislature in 2013.  

Wyoming also uses the term "interested person" in trust law.  One, a court may not intervene in the administration of a trust until an interested person invokes that court's jurisdiction.  Continuing judicial supervision of a trust can occur with a court order.  Two, "interested persons" can agree to nonjudicial settlement agreements which provide a cost effective means of documenting and settling certain trust issues without the expense and time required by a court proceeding.  

The last paragraph of the Wyoming statute is (D), which is:   If a trust has no qualified beneficiary under subparagraph (A), (B) or (C) of this paragraph, "qualified beneficiary" shall mean a beneficiary currently eligible to receive discretionary distribution of income or principal from the trust.W

Wyoming has this cascading definition of situations in which it is proper to require notice to be given to a certain class of beneficiaries.  A trust agreement is interpreted as a contract in Wyoming, and for that reason, the language of your trust must be reviewed to determine which category you are in as a beneficiary.  

Working with a trust law professional is the best way to determine which type of beneficiary you are and what type of disclosures you should receive from the trust.