Trustees must account for their actions when managing a trust. An annual trust accounting is a required tool to (1) keep the beneficiaries informed of a trustee’s actions; (2) seek approval of those actions; and (3) ensure an orderly administration and distribution of trust assets. Catalyst represents beneficiaries who suspect mismanagement of trust assets as well as fiduciaries who find themselves the target of a trust dispute.
Trust beneficiaries in Oregon have a right to an accounting by the trustee. An accounting provides information to beneficiaries regarding the assets of a trust or an estate. A typical trust accounting includes information about principal and income, debts and liabilities, taxes, disbursements to beneficiaries, fees paid to attorneys, accountants and other advisors to the fiduciary, and gains and losses on assets.
For Oregon trusts that became irrevocable on or after January 1, 2010, a trustee must notify qualified beneficiaries within a reasonable time after learning of the creation of the irrevocable trust (e.g. when a revocable trust becomes irrevocable upon the death of the grantor), as well as the following:
- the existence of the trust;
- the right to a copy of the trust instrument; and
- the right to an annual trustee report.
A trustee must send a trustee report (1) at least annually AND (2) upon termination of the trust to the permissible distributees of trust income or principal, but only to any other beneficiaries upon request. When the interest of a beneficiary is a specific gift, either of property or cash, the trustee is not required to provide a trustee report, unless the distribution has not been made before the end of a six-month period.
In addition, the trustee must keep beneficiaries of the trust reasonably informed about the administration of the trust, including any material facts needed to protect their interests.
Common trust accounting disputes arise under the following circumstances:
- Failure to comply with the terms and directions of the trust instrument
- Trustee misappropriation of trust funds or assets
- Failure to pay valid debts or liabilities
- Using trust funds for personal benefit
- Failing to invest funds or making imprudent investments, including failure to diversify the trust’s financial and real property investment portfolio
- Payment of attorney fees from trust assets for fees incurred by the actions of the trustee
- Fraudulent, improper or inadequate accounting
Catalyst attorneys routinely assist fiduciaries in the preparation and filing of accountings and trustee reports. Catalyst attorneys also have extensive experience in proceedings to compel a fiduciary to provide comprehensive, accurate, and timely reports and accountings and to challenge the sufficiency and/or accuracy of an accounting.
Once an accounting is filed with the Court, the trust finances must be disclosed, reviewed, and a judge has the power to decide the issues presented in both the accounting and any related objections. Where a trustee is found to have breached his or her fiduciary duties, the Court has the ability to issue a personal surcharge against the trustee and hold him or her personally liable for the harms and losses caused by the action or inaction by the trustee.
Catalyst recognizes the benefit of resolving a Trust Dispute discreetly and amicably, and we use our best efforts to achieve our clients’ goals outside of litigation. We are, however, fully prepared to take to trial any issues that cannot be resolved through settlement.
If you suspect mismanagement of trust assets, schedule a Free 15-Minute Case Evaluation to learn more about legal representation in a Trust Accounting Dispute, whether through negotiation, mediation, or trial.