There are a few exceptions to a Trustee’s duty to provide you with a Trust accounting no matter what type of beneficiary you happen to be.
Where the Trust Document Waives an Accounting.
If the Trust document waives an accounting, then a Trustee does not have to provide an accounting. This is an important exception, so the first thing you want to do with your Trust is read the accounting section. Most Trusts will have a section that discusses accountings. Sometimes the Trust document will require accountings, sometime it will waive them. You have to read your specific Trust document to find out the answer to this question.
If your Trust document waives the accounting requirement, you can still obtain an accounting from the Trustee if you show the Court that it is likely a material breach of the Trust has occurred. In other words, the Court can always require an accounting from a Trustee regardless of what the Trust document says. The only difference is that the accounting is not required as a matter of right, but rather at the discretion of the Court.
Why would anyone ever waive an accounting requirement in a Trust document? Many estate planning lawyers believe that waiving an accounting requirement makes the Trustee’s job easier. Unfortunately, it also makes it far more difficult for the beneficiary to oversee the Trustee and ensure he is doing his job appropriately. We would never recommend adding an accounting waiver to a Trust document, but many Trusts have such provisions. So be aware of what your Trust says before you assert your rights.
Where a Trust Beneficiary Waives an Accounting.
If a beneficiary waives the right to an accounting in writing, then a Trustee does not have to account (Probate Code section 16064). Why would a beneficiary waive the right to an accounting? Unfortunately, many Trustees try to force beneficiaries to waive an accounting right prior to making Trust distributions. A beneficiary may decide that a Trust distribution is more important than an accounting.
Sometimes a beneficiary will waive an accounting because they do not want the Trustee to use Trust funds to pay for preparing the accounting. Trust accountings can be expensive to create depending on the number of years, and amount of activity, being accounted for.
A beneficiary has the right to withdraw a waiver of a Trust accounting at any time. Once the waiver is withdrawn, then the Trustee must account for all activity that takes place AFTER the date of the waiver withdrawal. Also, the court can still order the Trustee to account during the period when the accounting was waived by the beneficiary if the beneficiary can show a likelihood that a material breach occurred during the period.
The bottom line: if you are a Trust beneficiary you should obtain as much information as possible from your Trustee. Request all the financial statements you can, and request an accounting when appropriate. There is never a time when you should not be fully and reasonably informed about your Trust administration.
