Reprinted from Family Wealth: Keeping It in the Family by James E. Hughes, Jr.
Beneficiaries have an obligation to educate themselves about the duties of a beneficiary, as well as the duties of the trustees. Listed below are specific responsibilities of beneficiaries:
- To gain a clear comprehension of each trust in which the beneficiary has an interest and a specific understanding of the mission statement for each trust as prepared by the trustees.
- To educate himself or herself about all trustee responsibilities.
- To understand the trustee’s responsibility to maintain the purchasing power of the trust’s capital while maintaining a reasonable distribution rate for the income beneficiaries.
- To have a general understanding of “modern portfolio theory” and the formulation and process of asset allocation.
- To recognize and look for proof that each trustee represents all beneficiaries.
- To meet with each trustee once each year to discuss his or her personal financial circumstances and personal goals and to advise the trustee on his or her assessment of the trustee’s performance of the Trustee Roles and Responsibilities to the trust, to the beneficiary and to family governance.
- To become knowledgeable about the functions and importance of each element of the family’s trust governance structure.
- To attend the annual business meeting of the family and to accept responsible roles within the family governance structure based on his or her possession of suitable qualifications for such roles.
- To develop a general capacity to understand fiduciary accounting.
- To demonstrate a willingness to participate in educational sessions and to become financially literate either through family seminars or family-funded educational programs.
- To know how and in what amount trustees and other professionals are compensated, and to obtain a general understanding of the budgets for the trust and investment entities in which the trust will be invested.