Duty to Inform and Account

The trustee has a responsibility to keep beneficiaries updated about the trust and its assets. This includes providing them with the trust's terms when asked, notifying them when the trust becomes irrevocable, and giving annual accountings of income to the beneficiaries entitled to it.

A trustee manages a family trust that has just become irrevocable. They notify the beneficiaries of this change and provide them with the trust terms upon request. Additionally, the trustee sends out annual accountings of the trust's income to the beneficiaries. As a result, the beneficiaries feel informed and secure about their interests in the trust.

Trustees must keep beneficiaries in the loop or risk a legal showdown.

Exams may present scenarios where a trustee fails to notify beneficiaries or provide accountings, leading students to overlook the importance of these duties. Watch for subtle hints about the timing of notifications or accountings.

Questions often test the nuances of the trustee's obligations, focusing on whether beneficiaries were adequately informed or if the trustee complied with the accounting requirements.