"TGIF: Thank Goodness I'm the Fiduciary" - Update Regarding the Trustee's Duty to Inform by Melissa E. Darigan, Esq.


When and what to disclose remains an area of controversy and concern for trustees and beneficiaries alike. Many trusts waive requirements that a trustee give a formal accounting to the beneficiaries. In addition, most state laws (including Rhode Island, and certain trusts in Massachusetts) do not mandate the time and manner by which a trustee provides a formal accounting to beneficiaries. A recent ruling from the North Carolina Court of Appeals, however, required a trustee to render an accounting in order to show that the trustee had performed its duties in good faith.

The trustee of an irrevocable trust was sued by the beneficiaries for breach of fiduciary duties relating to investment, management and distribution of trust assets. The complaint included a request for an accounting. The trustee objected to this request, claiming that neither the terms of the trust nor any aspect of North Carolina law required the trustee to provide an accounting. The trial court granted the trustee’s motion for a protective order, relying on a North Carolina statute that the duty to inform is not mandatory.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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