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Trustee Accounting - A guide to Trustee and Beneficiaries
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Trustee Accounting

Trust Law states that Trustee Accounting is the fiduciary duty of the trustee to keep the beneficiaries reasonably up-to-date on the “terms of the trust,” which includes but is not limited to any directions, instructions, and administration that affect the disposition of the trust. Should a beneficiary reasonably request additional information, the trustee has 60 days to provide the notification.

Trustee Refuses to Give Accounting

A trustee who refuses to give an accounting breaches their fiduciary duty and breaches probate code 16060, which states that a trustee must keep the trust’s beneficiaries reasonably informed and its administration.

How to Request an Accounting of an Estate

First, all beneficiaries have a right to request a formal accounting of an estate. An informal accounting may be desirable as it is less costly and time-consuming, but should there be suspicions of misappropriation of funds, then formal trust accounting maybe your best option.

Trustee Accounting

Does a trustee have to provide an accounting?

Related Practices: Estate & Trust Litigation, Estate Planning, Probate and Probate Litigation, Trust Administration.

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 a strict fiduciary duty to keep a complete an accurate record. In other words, they should 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)]

What serious breach of trust has the Trustee committed?

Is the Trustee:

  • 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 benefiting themselves before anyone other beneficiaries?

Take away: The Trustee is mandated to give an accounting to Beneficiaries of the Trust.  Learn more.

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Trustee Refusing to Give Accounting.. (continued)

It is important to find counsel if you feel any of the above is 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 should 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 should 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. 

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 the 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. 

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Trustee Accounting - Basics, Duties, Beneficiary Updates!
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