Jillyn Office Trustee Refuses to Give Accounting and What You Must Do!

The duties of a Trustee come with very serious duties and responsibilities. 

A Trustee and Co-Trustee who refuses to give an accounting of the assets can be held in breach of fiduciary duty. The heirs and beneficiaries can compel the trustee in probate court for Trust documents, asset information, and various other documents to ensure the trustee gives proper accounting; otherwise, trust litigation can arise..

But before you launch into possible litigation matters, let’s go over a few crucial facts. This way, you are on the right side of the courts.

So the first thing is to gather information about the Trust document. You will want to review it for the following:

  • Does the Trustee owe a duty to account and a duty to report? Typically a Trustee is under strict fiduciary duty to keep a complete an accurate record. In other words, they must inform and account.
  • Does the beneficiary, i.e., are you privy to the information? A Trustee is not required to account for a trust beneficiary if they waived their rights to an account and report. [Prob. Code § 16064(c)]
  • Are they:
  • mishandling funds
  • refusing to fulfill a beneficiary’s request for information about the administration of the trust.
  • Is the Trustee self-dealing, meaning they are benefitting themselves before anyone other beneficiaries?

It is important to find counsel if you feel any of the above are taking place. 

Trustee Duties:

The Trustee of a trust is required to act as a legal fiduciary on behalf of the trust beneficiaries. The trust instrument determines the scope and nature of the Trustee’s duty. They shall keep the qualified beneficiaries of the trust reasonably informed of the trust and its administration.

Once a Trustee accepts his/her duty’s, they must inform, but is not limited to, the following:

  • Within 60 days after taking the responsibility of the trust, the Trustee shall give notice to the qualified beneficiaries of the acceptance and their full name and address of the Trustee.
  • Within 60 days once the Trustee requires knowledge of the creation of the irrevocable trust, whether they learned it by the death of the settlor or any other means, the Trustee shall give notice of the identity of the settlor, a right to request a copy of the trust instrument, and the right to an accounting. 

Now, including with the fiduciary duties of the Trustee is these line items:

  • Upon a reasonable request, the Trustee shall provide to a qualified beneficiary a complete copy of the trust instrument. 
  • A Trustee must maintain records of his/her transactions so complete and accurate they can show by them his/her faithfulness to the trust.

Once you have a copy of the trust instrument, you may want to find counsel. https://leginfo.legislature.ca.gov/faces/codes_displayText.xhtml?lawCode=PROB&division=9.&title=&part=4.&chapter=1.&article=3.

Moreover, there is a statute that describes that a Trustee of an irrevocable trust shall provide an accounting to each qualified beneficiary annually. Also, the Trustee shall inform on the termination of the trust or even a change of the Trustee.

Now, as a Trustee, it is prudent to set up a bookkeeping system to keep track of all receipts, disbursement, and capital transactions and produced when necessary to substantiate the accounting.

Take away: If you have given reasonable time for the Trustee to answer your request, and have not done so, they are in breach of his/her fiduciary duty.

What are remedies for breach of contract?

As a beneficiary, you will need to take the breach of contract to court. An estate planning attorney with litigation experience is required.

They will look into these options and can include the removal of the Trustee. They are as follows:

  1. Compel the Trustee to redress the breach of contract by paying money or restoring property.
  2. Remove the Trustee
  3. Reduce or deny compensation to the Trustee

So, if the Trustee, if they cannot recover the sale of certain assets from the trust, they can be held personally responsible for those transactions.