Trustee’s and Their Duty to Inform

Juan Antunez, of The Florida Probate Litigation Blog posts here about the duty of a Florida Trustee to report and includes a great quote from this article (PDF, or at 40 Real Property, Probate and Trust J. 373 (Summer 2005)), by author and Denver, Colorado, trusts-and-estates attorney Kevin Millard:

To be able to enforce the trustee’s duties, the beneficiary of a trust must know of the existence of the trust and be informed about the administration of the trust. If there were no duty to inform and report to the beneficiary, the beneficiary might never become aware of breaches of trust or might be unaware of breaches until it is too late to obtain relief. In addition, providing information to the beneficiary protects the trustee from claims being brought long after events that allegedly constituted a breach, because the statute of limitations or the doctrine of laches will prevent the beneficiary from pursuing stale claims. As a result, the duty to inform and report to the beneficiary is fundamental to the trust relationship.

Juan writes:

At it’s core, the job of trustee is as much about keeping beneficiaries adequately informed as anything else. Most trust litigation can be traced back to a trustee’s inability to adequately explain him or herself to the trust beneficiaries.

And I completely agree. We’ve had cases come to us here solely because one of the trust beneficiaries feared the Trustee (who maybe wasn’t even appointed yet) was not going to communicate with them after the trust was funded.

Ohio imposes an analogous duty to the Florida’s statue in R.C. § 5808.13 Duty To Inform And Report.

(A) A trustee shall keep the current beneficiaries of the trust reasonably informed about the administration of the trust and of the material facts necessary for them to protect their interests. Unless unreasonable under the circumstances, a trustee shall promptly respond to a beneficiary’s request for information related to the administration of the trust.

(B) A trustee shall do all of the following:

    (1) Upon the request of a beneficiary, promptly furnish to the beneficiary a copy of the trust instrument. If the settlor of a revocable trust that has become irrevocable has completely restated the terms of the trust, the trust instrument furnished by the trustee shall be the restated trust instrument, including any amendments to the restated trust instrument. Nothing in division (B)(1) of this section limits the ability of a beneficiary to obtain a copy of the original trust instrument, any other restatements of the original trust instrument, or amendments to the original trust instrument and any other restatements of the original trust instrument in a judicial proceeding with respect to the trust.
    (2) Within sixty days after accepting a trusteeship, notify the current beneficiaries of the acceptance and of the trustee’s name, address, and telephone number;
    (3) Within sixty days after the date the trustee acquires knowledge of the creation of an irrevocable trust, or the date the trustee acquires knowledge that a formerly revocable trust has become irrevocable, whether by the death of the settlor or otherwise, notify the current beneficiaries of the trust’s existence, of the identity of the settlor or settlors, of the right to request a copy of the trust instrument, and of the right to a trustee’s report as provided in division (C) of this section;
    (4) Notify the current beneficiaries in advance of any change in the method or rate of the trustee’s compensation.

(C) A trustee shall send to the current beneficiaries, and to other beneficiaries who request it, at least annually and at the termination of the trust, a report of the trust property, liabilities, receipts, and disbursements, including the source and amount of the trustee’s compensation, a listing of the trust assets, and, if feasible, the trust assets’ respective market values. Upon a vacancy in a trusteeship, unless a cotrustee remains in office, a report for the period during which the former trustee served must be sent to the current beneficiaries by the former trustee. A personal representative or guardian may send the current beneficiaries a report on behalf of a deceased or incapacitated trustee.

(D) A beneficiary may waive the right to a trustee’s report or other information otherwise required to be furnished under this section. A beneficiary, with respect to future reports and other information, may withdraw a waiver previously given.

(E) The trustee may provide information and reports to beneficiaries to whom the provided information and reports are not required to be provided under this section.

(F) Divisions (B)(2) and (3) of this section apply only to a trustee who accepts a trusteeship on or after the effective date of this section, to an irrevocable trust created on or after the effective date of this section, and to a revocable trust that becomes irrevocable on or after the effective date of this section.

This section has been the cause of much debate in Ohio over whether or not these responsibilities present too much a of a burden for a Trustee and attempts have already been made to either reform this statue or repeal it entirely. Stay tuned.

0 Responses to “Trustee’s and Their Duty to Inform”

  • No Comments

Leave a Reply