Duty to Inform and Report

Question 1

Duty to inform and Report

Duty to inform and Report

Answer 1

keeping beneficiaries informed about the investment performance of the trust assets and the financial status of the trust is an ongoing obligation that hte trustee must fulfill
- not all beneficiaries are entitled to equal disclosure

Question 2

UTC 813 Duty to inform and report

A trustee shall keep the qualified beneficiaries of the trust reasonably informed about

Answer 2

the administration of the trust AND
of the material facts necessary for them to protect their interests

Question 3

UTC 813 Duty to inform and report

A trustee shall keep the qualified 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

Answer 3

unreasonable under the circumstances, a trustee shall promptly respond to a beneficaries request for information related to the administration of the trust

Question 4

UTC 103

defines “qualified beneficiary” as a beneficiary who, on the date the qualification is determined:

Answer 4

1. is a distributee or permissible distributee of trust income or principal;
2. would be a distribute or permissible distributee of trust income or principal if the interests of the distributees described in (a) terminated on that date, or
3. would be a distributee or permissible distriuteee of trust income or principal if the trust terminated on that date

Question 5

UTC

Basic requirement for disclosure are that a trustee must provide an accounting:

Answer 5

1. upon request of any beneficiary
2. there are material changes to the trust, including the creation or termination of the trust
3. on an annual basis

Question 6

Duty to inform and Report

Unless the trust states otherwise
THe accounting should list

Answer 6

“the trust property, liabilities, receipts and disbersments, including the source and amount of the trustees compensation, a listing of the trust assets and , if feasible, the respective market values”

Question 7

Duty to inform and Report

Whenever a beneficiary has questions or concerns about trustee management of trust assets, a request for an

Answer 7

accounting, is appropriate

Question 8

An accounting may provide the beneficiary with grounds for

Answer 8

further claims of breach of fiduciary duty

Question 9

Duty to inform and Report

2 types of accounting that a trustee may provide

Answer 9

1. formal (judicial)
2. informal (nonjudicial)

Question 10

Duty to inform and Report

Judicial accounting

Answer 10

• The trustee prepares with detailed accounting statements, and often in help with a lawyer, to ensure the form of accounting satisfies any local court rules
• The accounting is filed with the court

Question 11

Duty to inform and Report

Judicial accounting
The beneficiaries have a certain amount of time to

Answer 11

• respond to the accounting
• if dont object, they are barred from later bringing any claim of breach against the trustee that could have been brought in response of the accounting
• If matter not disclosed in the accounting, its not barred from subsequent beneficiary claim

Question 12

Duty to inform and Report

Informal accounting
Typically, the trustee will ask the beneficiaries to

Answer 12

sign off on the informal accounting, and each agreement may be binding

Question 13

Duty to inform and Report

Informal accounting

Answer 13

the trustee prepares and sends directly to the beneficiaries

Question 14

Duty to inform and Report

When a trust waives the beneficiaries right to an accounting

Answer 14

Trust terms cannot waive the beneficiaries right to an accounting

Question 15

Trustee must provide a (formal) accounting upon

Answer 15

1. request of any beneficiary
2. when there are changes to the trust
3. on an annual basis listing trust assets, liabllities, reciepts, and disbusments including trustee compensation and values

Question 16

Who the trustee must give the accountings to

Answer 16

qualified beneficiaries
(current beneficiaries, discretionary beneficiaries/permissible distributees= who benefit after current)

Question 17

Is duty to inform a mandatory rule?

Answer 17

UTC states, its a default rule so words of a trust can overwrite the default rule

Question 18

Can someone recieve information on behalf of a beneficiary?

Answer 18

Yes, representation
ex. minors, lack mental capacity

Question 19

When you have to provide an accounting

Answer 19

• annually
• when a material fact
• when beneficiary asks with a reasonable request

Question 20

By default you start getting info about the trust at

Answer 20

18

Question 21

waiving formal accounting

Answer 21

beneficiaries can waive formal accountings
- can revoke the waiver though

Question 22

Send limitations notice to beneficiaries to

Answer 22

run a shorter statute of limiatitions

Question 23

Negligence v. recklessness

Answer 23

substantial and unjustifiable risk
they know of it, but do it anyways