In California, a trustee must keep the trust beneficiaries reasonably informed of the trust and its administration. This does not mean that the trustee is required to inform the beneficiaries of every detail of the trust administration. The most basic action required of a trustee under the duty to inform is to promptly inform the beneficiaries of the existence of the trust and their status as beneficiaries, so that the beneficiaries may exercise their rights to secure information about the trust.
On a reasonable request by a beneficiary, the trustee must provide the beneficiary with a report of information about the assets, liabilities, receipts, and disbursements of the trust, and the acts of the trustee, and the particulars relating to the administration of the trust relevant to the beneficiary’s intent, including the terms of the trust. There are four exceptions to this duty which are identical to the duty to account. These exceptions are listed below.
A trustee is required to account to the beneficiaries as to the activities of the trust. Probate Code § 16062(a) states that a trustee shall account at least (1) annually, (2) at the termination of the trust, and (3) upon a change of trustee, to each beneficiary to whom income or principal is required or authorized in the trustee’s discretion to be currently distributed. The accounting is to be provided to each beneficiary to whom income and principal is required to be distributed.
Unfortunately, this fundamental duty to account is so often ignored if not outright refused by trustees that a trustee’s failure to account is more often than not the catalyst for intense trust conflicts between family members. If a trustee has nothing to hide then why do they not account, right? However, according to Probate Code § 16064, the trustee is not required to report information and account in any of the following situations:
If the trust instrument waives the requirement to report and account.
To the beneficiary of a revocable trust.
If the beneficiary has waived the right to report or account in writing. – Prob. Code §16064.
If the beneficiary and trustee are the same person.
California Probate Code permits any trust beneficiary of a trust that has become irrevocable to petition the court for an order compelling the trustee to account or to report information. Any trust beneficiary, including a remainder beneficiary, has standing to petition the court and it is within the court’s discretion to require the trustee to account to the petitioner. However, when the settlor and the trustee are the same person, the probate court ordinarily cannot compel the trustee to account or provide information regarding the trust assets for the period during which the trust remained revocable.
The trustee is supposed to provide you, the beneficiary, with trust accountings when they are due—for example, at the end of each year in which the trustee has acted. But where a trustee fails or refuses to account, then you have to take action. Before filing a petition compelling a trust accounting, a letter must first be sent to the trustee demanding a formal trust accounting. The trustee has sixty (60) days in which to provide an accounting. See Probate Code § 17200 (b)(7)(B) and (C). If the trustee fails to do so, then you have the right to file a petition with the probate court under Probate Code section 17200 and ask the court to order the trustee to account. And that’s how you obtain an accounting.
The anatomy of a trust accounting is very specific. Without exception, a trust accounting must contain the following information:
The period and summary of a trust accounting must also meet the following requirements:
Due to the inherit complexities in either creating or compelling a trust accounting, it is in your best interest to contact the Law Office of Eric J. Rechsteiner and put to work this Office’s experience and skillset in obtaining your trust accounting. Whether you are a beneficiary seeking trust asset information or a trustee seeking to fulfil your trustee duties, obtain a trust accounting, have it filed it with the court, and only then will the reasonableness of the actions of the trustee and contents of the trust be disclosed.