What Are Your Options if the Trustee Refuses to Give Accounting?

The trustee of a revocable or irrevocable trust is required to follow specific rules, regulations, and procedures. Importantly, a trust beneficiary has the right to have a trustee who acts in good faith, is loyal, and protects the trust property. They also have the right to be kept apprised about accounting details — including information about the distribution date and explanations for any disbursement delay. If the trustee refuses to give an accounting or to keep you apprised, it’s important to know what your options are.

What is an Accounting?

Trusts are typically not overseen by the court and are often used as a way to avoid probate. However, there may be certain instances where a trustee or beneficiary might seek court oversight over the administration of a trust — such as in situations involving complicated family dynamics or aggressive creditors. Every trustee who is subject to the continued supervision of the court must file a duly verified annual accounting with the court administrator within 60 days of the conclusion of every accounting year.

Pursuant to Minnesota law, the accounting must contain the following:

• Statements of the total inventory and fair market value of the assets of the trust principal as of the beginning of the accounting period
• A complete itemized inventory of the assets of the trust principal at the end of the accounting period
• An itemized statement of all income transactions during the accounting period
• A summary statement of all income transactions during the accounting period
• A summary of all income transactions during the accounting period, including the total distributions made to beneficiaries
• The total of the trustees’ fees and attorneys’ fees charged to the income
• An itemized statement of all principal transactions during the period of the accounting

In many cases, having a valid trust in place avoids court involvement and the probate process. However, for those that are under court supervision in accordance with Minnesota’s trust law, an accounting is mandatory. But regardless of whether it is required, it is always best for a trustee to conduct an accounting and record all of their actions in order to demonstrate that they take their duties as a fiduciary seriously. If certain mistakes are made during the trust administration process, the trustee can potentially incur liability for their actions — or inaction.

Under the Minnesota trust code, hearings on annual accounts must be held at least once every five years. However, any party with an interest may file a request for a hearing in connection with an annual accounting prior to that interval.

What Can You Do if the Trustee Refuses to Give Accounting?

A trustee must take their responsibilities, obligations, and fiduciary duties very seriously. If a trustee refuses to give an accounting, they are not only in breach of their fiduciary duty — they are also in violation of the Minnesota trust code. In such cases, a trust beneficiary may bring a petition to the court requiring a trustee to account.

If a trustee fails to account or breaches their fiduciary duty in some other way, the court may grant relief to a beneficiary who suffered harm. To establish a breach of fiduciary duty, a trust beneficiary must be able to show 1) a fiduciary duty existed; 2) the duty was breached; 3) causation; 4) damages. To determine such matters, a court would look to the terms of the trust, the actions of the trustee, and the damages incurred by the beneficiary.

A trustee can be removed by the court if they have “committed a serious breach of trust,” are unfit to administer the trust effectively, persistently fail to administer the trust effectively, or cannot cooperate with co-trustees. They may also be removed if there has been a substantial change in circumstances and removal would be in the best interests of the trustees. Additionally, a trustee could be held liable for an intentional act or even an unintentional act taken during the trust administration process. For instance, if they fail to file proper tax returns, invest prudently, or administer the trust in accordance with the terms, they may incur personal liability.

Contact an Experienced Minnesota Trust Litigation Attorney

In the event a trustee refuses to give accounting, you may need to take legal action. It’s crucial to discuss your rights and options with a knowledgeable trust litigation attorney. At Dave Burns Law Office, I provide reliable counsel for matters concerning trust administration and litigation. If you would like to discuss a trust litigation matter, I welcome you to contact me at (612) 677-8351 or by emailing dave@daveburnslaw.com. I represent clients throughout the Twin Cities metro area and am available to meet with clients in both Minneapolis and St. Paul.