Accountings

Generally Purpose = Allow beneficiary to obtain information to see if trustee is breaching duties. Texas does not require regular accountings. Some states require annual accountings even without beneficiary request or court order.

Who may request an accounting? 1. Beneficiary -- § 113.151(a) Written demand to trustee.

Who may request an accounting? 1. Beneficiary -- § 113.151(a) Written demand to trustee. Trustee must provide accounting within 90 days.

Who may request an accounting? 1. Beneficiary -- § 113.151(a) Written demand to trustee. Trustee must provide accounting within 90 days. If trustee does not, any beneficiary may sue.

Who may request an accounting? 1. Beneficiary -- § 113.151(a) Written demand to trustee. Trustee must provide accounting within 90 days. If trustee does not, any beneficiary may sue. Court may award beneficiary’s attorney fees and court costs against: trust, or trustee personally.

Who may request an accounting? 1. Beneficiary -- § 113.151(a) Written demand to trustee. Trustee must provide accounting within 90 days. If trustee does not, any beneficiary may sue. Court may award beneficiary’s attorney fees and court costs against trust or trustee personally. Only one accounting per 12 months unless court orders more.

Who may request an accounting? 2. Interested Person -- § 113.151(b) File suit against trustee. Court will order accounting if it finds the interested person’s interest warrants an accounting.

Contents of Accounting -- § 113.152 1. All new trust property not previously accounted for.

Contents of Accounting -- § 113.152 2. Account of all: Receipts Disbursements Other transactions Source and nature of each Show income and principal separately

Contents of Accounting -- § 113.152 3. List and description of all trust property.

Contents of Accounting -- § 113.152 4. Cash balance on hand and where kept.

Contents of Accounting -- § 113.152 5. All known liabilities

Settlor’s Ability to Alter Accounting Rules 1. Settlor may require accountings at a stated time, interval, or event.

Settlor’s Ability to Alter Accounting Rules 2. Total waiver of accountings not allowed Against public policy Without accountings, beneficiaries unable to ascertain if trustee in breach Hollenbeck v. Hanna – p. 617

Settlor’s Ability to Alter Accounting Rules 3. Limitations allowed under § 111.0035(b)(4)(A): Trust is revocable, or Beneficiary of irrevocable trust is remote: Not entitled to current distribution. Not entitled to distribution if trust ended now.

Advice Keep trust records in accounting form from Day 1. Render regular accountings even if not asked. Easier to obtain records Good reflection on trustee Good psychological effect on beneficiaries Respond to accounting requests promptly.