Your Rights as Trust Beneficiary
Trust Beneficiary’s Right to Information:
The trustee has a duty to keep the beneficiaries of a trust reasonably informed of the trust and its administration. Probate Code § 16060. This rule applies to remainder beneficiaries who might not otherwise be entitled to an accounting. Prob Code § 16062.
The California Law Revision Commission (CLRC) Comment to Prob Code § 16060 states: “The trustee is under a duty to communicate to the beneficiary information that is reasonably necessary to enable the beneficiary to enforce the beneficiary’s rights under the trust or redress a breach of trust.”
Trustees who fail to keep proper records or fail to account or provide information to the beneficiaries or the court when required can be held liable for breach of fiduciary duty, contempt, damages and, where appropriate, attorney fees. (CEB 7.2, Trust Administration).
When two co-trustees are serving, the Probate Code requires that the co-Trustees act jointly. Probate Code § 15620 provides: “Unless otherwise provided in the trust instrument, a power vested in two or more trustees may only be exercised by their unanimous action.”
“Unless otherwise provided in the trust instrument, if a vacancy occurs in the office of a cotrustee, the remaining cotrustee or cotrustees may act for the trust as if they are the only trustees.” Probate Code § 15621.
Finally, “Unless otherwise provided in the trust instrument, if a cotrustee is unavailable to perform the duties of the cotrustee because of absence, illness, or other temporary incapacity, the remaining cotrustee or cotrustees may act for the trust, as if they are the only trustees, where necessary to accomplish the purposes of the trust or to avoid irreparable injury to the trust property.” Probate Code § 15622.
Accounting by Trustee:
The trustee shall account at least annually, at the termination of the trust, and 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. Probate Code § 16062.
Excluded from the right to receive an account are all beneficiaries under a revocable trust other than the person holding the power to revoke. Probate Code § 15800. In addition, if the beneficiary and the trustee are the same person, there is no duty to account. Prob C § 16069.
The duty to account is the trustee’s. Probate Code § 16062. If the trustee personally prepares the account, and is being paid on a percentage basis for trustee fees, then the expense of preparing the account may not be charged in addition to the percentage fee. If the trustee’s attorney prepares the account, then the attorney may charge additional fees for this service.
If an accountant prepares the account for the trustee, the accountant should be familiar with the court accounting rules and the Uniform Principal and Income Act.
As for timing of the account, the Trustee must account at least annually, at the termination of the trust, and upon a change of trustee.
A beneficiary may seek to compel an account “if the trustee has failed to submit a requested account within 60 days after written request of the beneficiary and no account has been made within six months preceding the request.” Prob C § 17200(b)(7).
In addition, where a trustee accounts to a beneficiary, the trustee may submit a petition with the court settling the accounts and passing upon the acts of the trustee, including the exercise of discretionary powers. Prob C § 17200(b)(5).
There is a 4 year statute of limitation to bring a cause of action against a trustee for breach of trust. CCP § 343. However, “if a beneficiary has received an interim or final account in writing, or other written report, that adequately discloses the existence of a claim against the trustee for breach of trust, the claim is barred as to that beneficiary unless a proceeding to assert the claim is commenced within three years after receipt of the account or report.” Prob C § 16460.
To start the running of this three year period, the account must be accompanied by a statement that says: “that claims against the trustee for breach of trust may not be made after the expiration of three years from the date the beneficiary receives an account or report disclosing facts giving rise to the claim.” Prob C § 16063.
The period to object can be shortened to a period of not less than 180 days where the trust instrument so provides as long as the provisions of Prob C § 16461 are complied with.
Court Accounts for Trusts:
A court account is a court supervised proceeding in which the Trustee submits his or her account to the court for settlement.
Prob C § 17200(b)(5) permits a trustee to submit an account to the court asking for the court to settle “the accounts and passing upon the acts of the trustee, including the exercise of discretionary powers.”
If a beneficiary has not received an account, he or she may submit a petition to the court asking the court to compel an “account to the beneficiary, subject to the provisions of Section 16064, if the trustee has failed to submit a requested account within 60 days after written request of the beneficiary and no account has been made within six months preceding the request.” Prob C § 17200(b)(7).
The proceeding must be brought in “the county where the principal place of administration of the trust is located.” Prob C § 17005. This means “the usual place where the day-to-day activity of the trust is carried on by the trustee or its representative who is primarily responsible for the administration of the trust.” Prob C § 17002.