By Dawn M. Hall Cauthen
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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Typically, when you account in
a trust proceeding, you must also satisfy your duty to report. Often, people don't think of them as two
distinct duties, but they really are. Your accounting may disclose certain
facts, but it doesn't always disclose all the information that a
beneficiary is entitled to receive.
Because an accounting simply consists of a listing of transactions, you
can't always tell what went on behind the scenes, which then resulted in the
charges and credits reported in the accounting.
So, your duty to report
is to provide information to the beneficiary that a reasonable person would
want to know in order to protect their interests.
Specific persons are also
entitled to receive a report. A trustee
must report information upon reasonable request. In this context, a beneficiary is very broadly
defined and includes a person with a present or future interest in the trust,
regardless of whether the interest is vested or contingent. In California, the definition of
"beneficiary" that applies in the context of Entitlement to Report is found in
California Probate Code Section 24.
There is an exception to
the statutory duty to account-report when the trust is revocable. Despite the
general requirement that accounts be provided to current trust beneficiaries
and reports to beneficiaries who reasonably request them, counsel also needs to
look at whether the trust is revocable or irrevocable. If the trust is
revocable, the person holding the power to revoke is the sole person entitled
to receive the account-report.
I find this scenario
often arises in the context of adult children and their parents. A child often
wants to know what the parent is spending to make sure there is "enough left"
for the child when the parent dies - forgetting completely that it is, after
all, the parent's money. During the time the trust remains revocable by the
parent, the child is not entitled to any information regarding the transactions
of the trust.
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