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Trustee Overview

Trustee Accounting and What You Should Know!
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Trustee Accounting

Trust Law says that Trustee accounting is the Trustee’s fiduciary duty to keep beneficiaries up-to-date about the “terms” of the Trust. This includes, but is not limited to, any instructions, directions, or administration that may affect the Trust’s disposition. The Trustee has 60 days to notify a beneficiary if they have reasonable grounds to request additional information.

What happens when a Trustee Refuses To Give a beneficiary an Accounting?

When a trustee refuses to give an accounting breaches their fiduciary duty and breaches probate code 16060, which says that trustees must keep trust beneficiaries about the administration process reasonably informed.

Requesting an Accounting for an Estate

First, beneficiaries can request a formal accounting. Although informal accounting is more cost-effective and quicker, a formal Trust accounting might be the best option if there are suspicions of misappropriation of trust funds.

TRUSTEE ACCOUNTING

Is it necessary for a trustee to prepare an accounting?

Similar Practices: Estate & Trust Litigation. Estate Planning. Probate and Probate Litigation. Trust Administration.

Let’s review some key facts before we get into potential litigation issues. You will be on the right side when you go to court.

Gather information about the Trust document.

It is worth reviewing for the following reasons:

  • Is there a duty on the Trustee to account for and report? In general, a Trustee has a fiduciary obligation to maintain a complete and accurate record. They should also inform and account.
  • Is the beneficiary aware of the information? If they have waived their right to an account or report, the Trustee does not need to account for them. 

What grave breach of Trust has the Trustee made?

Is the Trustee:

Take away: The Trustee must provide an accounting to the Beneficiaries of Trust. Find out more. 

Trustee Refused to Give Accounting.. (continued).

If you feel that any of these are happening, it is essential to seek counsel.

Trustee Duties:

The Trustee is required to act in the role of a legal fiduciary for trust beneficiaries. The Trust instrument defines the scope and nature of the Trustee’s duties. They must keep qualified beneficiaries of Trust informed about the Trust and its administration.

After a Trustee has accepted their duties, they should inform the following, but not limited to:

  • The Trustee must notify the qualified beneficiaries within 60 days of taking responsibility for the Trust. They will also need to give their full names and addresses.
  • The Trustee must inform the settlor within 60 days if they need to know about the irrevocable Trust.

These line items are included with the fiduciary obligations of the Trustee:

You may be able to seek counsel once you have a copy of the trust instrument.

A statute also states that the Trustee of an irrevocable trust must provide an accounting to all qualified beneficiaries each year. The Trustee must inform beneficiaries about the end of the Trust and any changes to the Trustee.

As a Trustee, it is prudent to establish a bookkeeping system to keep track of all receipts, capital transactions, and disbursements. These records can be produced when required to support the accounting.

Takeaway: The Trustee is in breach of their fiduciary duty if they do not respond to the request within a reasonable time.

What are the remedies for contract breach?

You, as a beneficiary, will have to bring the breach of contract to court. You will need an estate planning attorney who has experience in litigation.

These options will be explored and may include the removal or replacement of the Trustee. These are the following:

  1. Require the Trustee to pay money or restore the property to remedy the breach of contract.
  2. Removing the Trustee
  3. Deny or reduce compensation to the Trustee

If the Trustee is unable to recover certain assets from the Trust, they may be held responsible.

Questions?  Contact us today at 888-318-4430 and speak to a Hess-Verdon litigation attorney.

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Trustee Accounting And What You Should Consider!
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Client Since 1994

Trustee Accounting And What You Should Consider!

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Client Since 2006

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