The Uniform Trust Code’s qualified-beneficiary concept confuses yet another court

Charles E. Rounds, Jr. - Suffolk University Law School

Trustees have always been accountable in equity to the holders of the vested and contingent equitable property interests that are incident to the trust relationship. They still are. Thus, a trustee has an affirmative duty to furnish each beneficiary with all information that he would need to protect/defend his equitable property rights (“critical information”). The UTC creates two classes of beneficiary, qualified and non-qualified, the former presently ascertainable, the latter not, and then saddles trustees with an additional affirmative duty to supply the qualified ones with non-critical information relating to the “day-to-day affairs of the trust.” See UTC §103, cmt. For more detail and discussion see § of Loring and Rounds: A Trustee’s Handbook (2022), which section is reproduced in its entirety in the appendix immediately below. Now comes In the matter of the Colecchia Family Irrevocable Trust, [], Mass. Appeals Court, No. 20-P-224, 11/29/2021. The subject of the litigation was an irrevocable, income-only/use-only trust under which the equitable property rights of remaindermen had vested ab initio. The fiduciary-disclosure issue was as follows: Were trustees accountable to the remaindermen during the lifetimes of the current beneficiaries? The Court’s holding: They were not. We disagree. First, equitable non-possessory property rights in the remainder in corpus had vested ab initio. Second, the trustees had had a background overarching enforceable equitable duty to act in the interests of all beneficiaries, not just the current ones. See Massachusetts UTC §105(b)(2).

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Charles E. Rounds, Jr. - Suffolk University Law School

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