The Duty of a Trustee to Provide an Accounting to Beneficiaries of a Family Trust

Inheritances can be complex matters, especially when they involve family trusts. These legal entities safeguard assets for beneficiaries, who are often designated family members.

A trustee is a fiduciary named by the creator of the trust, known as the settlor. The trustee has a duty of loyalty and care to the beneficiaries that includes the obligation to act in their best interests and to keep them informed about the trust’s administration. A part of that obligation is the duty to provide an accounting to the beneficiaries.

Think of a family trust as a shared pot of money, managed by the trustee for the benefit of the named beneficiaries. Without regular updates, beneficiaries are left in the dark. They can’t hold the trustee accountable, assess the trust’s health or plan for their future. This lack of information can breed suspicion, resentment and, ultimately, lead to legal disputes.

While the specifics might vary depending on the trust document, a Kansas statute outlines the general requirements for trustee accountings, which include an annual report provided to the beneficiaries. This report must include:

• A detailed statement of income and expenses, detailing all cash inflows and outflows
• An inventory of all trust assets, their current values and any changes since the previous report
• Information about investments, including their performance and any changes in the investment strategy

Beneficiaries have the right to request and receive further information about the trust, such as copies of tax returns, investment statements and receipts. They may also request more frequent accountings, such as quarterly or monthly.

The duty to provide accounting helps to ensure that the beneficiaries are aware of how the trust is being managed and that the trustee is acting in accordance with the terms of the trust. If the trustee fails to provide an accounting, or if the accounting is inaccurate or incomplete, the beneficiaries may be able to petition the court to compel accounting, potentially leading to surcharges (financial penalties) against the trustee for violating their fiduciary duties. In extreme cases, the court may even remove the trustee.

If you are a beneficiary of a family trust, it is important to keep track of the trustee’s exercise of responsibilities. You should review and keep copies of any accountings that you receive. If you notice discrepancies or irregularities, an experienced wills and trusts lawyer can advise you of your rights and remedies.

At Peggs Wheeler, LC in Wichita, we work with beneficiaries and trustees, offering clear guidance on the rules surrounding providing accounting for a family trust. For guidance on your particular matter, reach out to us by calling 316-512-7853 or contacting us online.