Trustee's Obligation to Inform Beneficiaries: Avoiding Breach of Fiduciary Duty Claims

Description

A critical obligation for trustees of irrevocable trusts is the duty to inform beneficiaries of the trust's existence and activities. Trustees often find themselves facing beneficiary claims of breach of fiduciary duty for failure to comply with these responsibilities. Inconsistencies between the trust document and the applicable state law frequently complicate compliance. Fiduciaries and their advisers can avoid liability by thoroughly understanding the critical components of a trustee's duty to inform.

While there is no uniform standard governing trustees' duty to inform, virtually every state imposes a fiduciary duty on trustees to provide certain information to trust beneficiaries. Most states require trustees to offer regular trust accountings to some or all current beneficiaries. Additionally, states have long recognized the right of beneficiaries to receive information on request.

Many states' trust statutes will not relieve the trustee of the duty to inform, even if it is waived in the trust instrument, except in limited circumstances. Because of variances among the states in the scope of the applicable duty to inform, trustees and their advisers should have a solid grasp of these fiduciary duties to avoid unexpected liability.

Listen as our panel of authoritative presenters provides estate planning and trust counsel with practical guidance for understanding and complying with trustees' duties to provide information to beneficiaries, report trust existence and performance, and meet critical obligations to avoid liability and defend against beneficiary claims.