As I have described in previous posts on this site, individual trustees (as opposed to institutional trustees) too often fail to keep trust beneficiaries adequately informed. This is especially common upon the death of the settlor (the creator) of a revocable trust. The successor trustee frequently does not understand what his or her responsibilities are, and in some cases does not even care.
The Utah Probate Code imposes the following informational requirements on trustees:
Within 60 days after the settlor’s death, the trustee must notify the beneficiaries of their right to request a copy of the trust instrument and of their right to receive an annual report of the trust’s status and activities.
Accordingly, the trustee must promptly furnish a beneficiary with a copy of the trust instrument on request, and a trustee must send to the trust beneficiaries, on request, a report of the trust property, liabilities, receipts and disbursements.
More generally, a trustee must keep the beneficiaries reasonably informed regarding the administration of the trust and of the material facts necessary for them to protect their interests. A trustee must promptly respond to a beneficiary’s request for information related to the administration of the trust. The Uniform Law Comments to the Utah Probate Code state: “The duty to keep the beneficiaries reasonably informed of the administration of the trust is a fundamental duty of a trustee.”
Failure to provide any of the foregoing information, after being requested to do so, constitutes a breach of the trustee’s fiduciary duties. For such violations, the trustee may be removed from office. The Uniform Law Comments state: “A particularly appropriate circumstance justifying removal of the trustee is a serious breach of the trustee’s duty to keep the beneficiaries reasonably informed of the administration of the trust or to comply with a beneficiary’s request for information.” The trustee may also be personally liable for any damages incurred by the beneficiaries.
Often, if the trustee refuses to provide the required information to the beneficiaries, the trustee is also engaging in other inappropriate conduct with respect to the trust assets. If the trustee has engaged in any self-dealing, he or she has probably breached his or her fiduciary duty. Any such actions may be set aside and declared void. Again, for these violations, the trustee may be personally liable for any damages incurred by the beneficiaries. Such actions could also expose the trustee to criminal sanctions.
If a trustee has committed a breach of fiduciary duty, the court may require that the trustee pay his or her legal fees from his or her own personal funds, rather than from the trust funds; that the trustee also pay the beneficiary’s legal fees from the trustee’s personal funds; and that the trustee be denied compensation for his or her services as trustee.
For a discussion of estate planning, revocable trusts and probate in Utah, see “Basic Estate Planning Information” on the home page of this website. For a more detailed discussion of trustee responsibilities in Utah, see “Serving as Trustee” on the home page of this website.
Rust Tippett is the author of this blog post.
Copyright 2015 UNLEPI, LLC, a Utah limited liability company. All Rights Reserved.
This blog post in no way creates an attorney-client relationship between the reader and either Robert S. (Rust) Tippett or Bennett Tueller Johnson & Deere, LLC. The reader should consult with his or her own estate planning attorney regarding his or her particular circumstances.