By Dawn M. Hall Cauthen
Dawn M. Hall Cauthen
is senior counsel at Procopio, Cory, Hargreaves &Savitch LLP in
Carlsbad, California, where she focuses her practice on the areas of estate
planning, trust administration, probate, estate tax and gift tax matters. Ms. Cauthen is a contributing author of
Chapter 9, "Seeking or Opposing an Account," of the Matthew Bender Practice Guide: California Trust
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If you are looking at
representing a trustee or a beneficiary in an accounting proceeding, what is
the very first thing that you should do? What would be one of the very first
things that you would do if a beneficiary comes to you saying "I can't get any
information" or a trustee comes to you and saying "these beneficiaries are
driving me crazy"? What's the first step-most
often the overlooked step?
Read the trust! Outline
the trust. Read every word. Don't just skim the headings. You know, I'm often surprised
what I find under various headings. Sometimes, what it says has nothing to do
with the heading. Recently, I had a trust that had a requirement that a trustee
account every six months-and it was in the trustee's power section, not in the
accounting section where it belonged. So, read the trust, be intimately
familiar with the trust. You don't want to be in the embarrassing position of
filing objections because the trustee didn't comply with the Uniform Principal
and Income Act when there's a provision excusing compliance in the trust.
When I represent a
beneficiary, I send a letter to the attorney for the trustee before I do
anything. My first letter will say something to the effect of, "I have a copy
of instrument named X, dated Y, signed by A & B." And then I list
everything I have, the dates and who signed it.
I ask them to confirm-in writing-that these documents constitute all the
documents of the trust and that there have been no revocations or changes.
'Sets The Playing
The trust sets the
boundaries and it sets the playing field, so you want to know that what you
have is correct. And often times I'll get a response back that will say
something like, "actually, there was an additional amendment to the survivor's
trust that you don't have." Or, "This was revoked or these documents were
entirely superseded by another completely different plan." This is why you need
to know the universe that you are working in.
You need to determine the
existence and scope of the trustee's duty to account, which you can do by reading
the trust instrument. The trust instrument will determine the nature and scope
of the Duty to Account Report. It can entirely waive an accounting or it can
specify the frequency of the accountings. I've only seen one in 18 years of
practice that required an accounting every six months. Most of the time the
accounting requirements are annual, sometimes bi-annual-but read the trust and
know what your trust requires.
It is also important to
remember that if there is a waiver of the Duty to Account that that waiver does
not apply when the trustee is a disqualified person. In California, where I
practice, disqualified persons are defined in California Probate Code Sections
21 through 50; or 21 through 80, depending on when the trust became
The trustee also has a
statutory Duty to Account under California Probate Code Section 16062. This
section provides that a trustee must account at least annually on the
termination of the trust, or on a change of trustee.
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