§ 83Duty to Keep Records and Provide Reports, Restatement (Third) of Trusts § 83 (2007)

Restatement (Third) of Trusts § 83 (2007)

Restatement of the Law - Trusts

October 2016 Update
Restatement (Third) of Trusts
Part 6. Trust Administration
Chapter 15. Specific Duties of Trusteeship

§ 83 Duty to Keep Records and Provide Reports

Comment:

Reporter’s Notes on § 83

Case Citations - by Jurisdiction

0 A trustee has a duty to maintain clear, complete, and accurate books and records regarding the trust property
and the administration of the trust, and, at reasonable intervals on request, to provide beneficiaries with reports
or accountings.

Comment:

a. Duty to keep records. Implicit in the duty to provide information to beneficiaries (§ 82) is the duty stated in this Section
requiring a trustee to maintain an adequate set of books and records. The performance of these record-keeping responsibilities
is also essential to a trustee’s duty to collect and safeguard the trust property (§ 76, Comment d) and to the beneficiaries’ right
to enforce the trustee’s duty to act with prudence, loyalty, and impartiality (§§ 77- 79), as well as the trustee’s duty regarding
reasonable and appropriate costs of administration (§ 88). Accordingly, the trustee has a duty to maintain books (or accounts)
and records that show in detail the nature and amount of the trust property and the trustee’s administration thereof.

With regard to the latter, the records of a trust must provide information that will enable the trustee to account for receipts,
expenses, and distributions made to beneficiaries, and for the sale, purchase, or exchange of trust properties. In addition, the
records must show allocations between the principal and income accounts (Chapter 23) and any other information that may
be needed in providing a report to the beneficiaries or in presenting a more formal accounting to the beneficiaries or in court
(Comment b).

Given the diversity of trusts and trustees, the law recognizes that the duty under this Comment may be satisfactorily
discharged by simple, orderly forms of bookkeeping and record maintenance, disclosing information in an understandable
manner that will enable beneficiaries to determine whether the trust is being properly administered.

a(1). Consequences of failure to maintain records. A trustee who fails to keep proper records is liable for any loss or expense
resulting from that failure. A trustee’s failure to maintain necessary books and records may also cause a court in reviewing a
judicial accounting to resolve doubts against the trustee. These failures by trustees may furnish grounds for reducing or
denying compensation, or even for removal, or for charging the trustee with the costs of corrective procedures or of having to

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§ 83Duty to Keep Records and Provide Reports, Restatement (Third) of Trusts § 83 (2007)

conduct otherwise unnecessary accounting proceedings in court.

b. Duty to provide reports. The right of any beneficiary to request information under § 82(2) includes a right to request and
receive accountings or comparable reports (see below) from the trustee at reasonable intervals. Also, in a proper judicial
proceeding, a beneficiary may compel the trustee to render an account of trust administration to the appropriate court.
(Although a routine requirement of periodic reporting is not imposed on trustees by this Section or § 82, matters of court and
noncourt accountings are regulated—as to both form and frequency—by statute in many states, particularly with respect to
testamentary or court-appointed trustees but increasingly, though often with less burden, with respect to all trustees.)

When a trustee prepares and provides a report in response to a request by a beneficiary, the trustee might wish to follow a
simple, routine practice of also sending a copy to other beneficiaries, particularly to fairly representative beneficiaries
(described in § 82, Comment a(1)) and perhaps to other beneficiaries as well. As noted below, a copy must be sent to other
beneficiaries who request it. A beneficiary who receives an accounting or other report of the trustee’s administration is not
precluded from making requests for additional information under § 82(2).

If a beneficiary is not sent a report (or accounting) at about the time of another’s request and later asks for a report, it may be
a reasonable and sufficient response for the trustee to provide that beneficiary with a copy of the recent report.

The trustee may be required to report on request not only to beneficiaries who are presently entitled or eligible to receive
payments of income or principal (or other “fairly representative beneficiaries” under § 82, Comment a(1)), but also to other
beneficiaries who will or may be entitled to income or principal in the future, including beneficiaries whose interests are
contingent. See, however, Comment d, and also § 82, Comment e. This breadth of beneficiary rights under this Section, and
under § 82, is essential to the enforceability of a meaningful duty of impartiality.

A trustee’s duty to provide “reports” or “accountings” to a beneficiary may be satisfied by relatively informal reports that
reveal trust assets and liabilities, receipts and disbursements, and other transactions involving trust property, and that disclose
the amounts and bases of compensation paid to the trustee(s) and any agent(s) during the accounting period covered by the
report. Trust assets should be listed with their respective market values (using good-faith estimates as necessary) as of the
date of the accounting.

b(1). Cross-references re: accountings. On the general duty of trustees to provide reports or accountings on request, contrast
§ 74, Comment a(1), that no accounting is required of a trustee-settlor of a revocable trust or a trustee-beneficiary (donee)
who holds an ownership-equivalent power; also cf. id., Comments d, c, and g, limiting the rights of beneficiaries in other
situations in which a competent settlor or donee holds a power of revocation or withdrawal.

That a successor trustee has a responsibility to ascertain and collect trust assets and to discover and enforce trust claims, thus
entitling the successor (as well as the beneficiaries) to obtain an accounting, or to review trust records or other information,
upon termination of a prior trusteeship, see § 76, Comment d. That distributees are entitled to an accounting on termination of
a trust, see § 89, Comment c.

c. Effect of report or accounting; adequate disclosure. With respect to beneficiaries who are properly made parties to a
judicial proceeding, a court order approving all or part of a trustee’s accounts discharges the trustee from liability (or further
liability) for matters appropriately disclosed. Because a trustee has an affirmative duty to disclose relevant information, a
matter involving sensitive issues must be revealed in the accounting with sufficient clarity to invite attention to the issue if
the court order is to protect the trustee as a matter of issue preclusion. Illustrative would be a matter involving self-dealing by

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§ 83Duty to Keep Records and Provide Reports, Restatement (Third) of Trusts § 83 (2007)

a trustee, even a purportedly permissible form of self-dealing (see, e.g., § 78, Comment c(5), and cf. id., Comment d(1)).

In the context of a nonjudicial accounting or report, a trustee may be protected from challenge by a beneficiary with respect
to matters appropriately disclosed in the accounts or report submitted to the beneficiary, including one who is represented by
a guardian ad litem or by virtual representation (on which see § 65, Reporter’s Note to Comments b and c). The trustee’s
protection may result from approval (i.e, informed consent) by or on behalf of the beneficiary (see § 97 and § 78(3),
Comment g) or from passage of time under an applicable statute of limitations or the doctrine of laches (see § 98).

d. Terms of the trust. Occasionally the terms of a trust provide that the trustee shall have no accountability for his or her
conduct in the administration of the trust. Assuming that the settlor intended to create a trust relationship, however, this does
not preclude the beneficiaries from holding the trustee liable for a breach of trust or otherwise accountable for the trust
property and its administration. A trust provision of this type may be interpreted as having the same effect as an exculpatory
clause, and thus as being subject to the same limitations. See § 96, and cf. § 87.

Except as prohibited or limited by statute, the terms of a trust (or waiver by a beneficiary) can properly dispense with or limit
the normal requirements for submission of reports or accountings under this Section or as imposed by statute. A trust
provision of this type, however, does not eliminate the trustee’s duty to furnish information in accordance with the rules (and
qualifications) stated in § 82; nor does it dispense with the duty to maintain records in some reasonable form (Comment a) at
the risk of suffering consequences as mentioned in Comment a(1).

The terms of trusts sometimes provide that the trustee need only account or submit reports to a designated person, for
example, to one of the beneficiaries of the trust (or to the settlor of an irrevocable inter vivos trust), and that the approval of
the trustee’s account or report by that person shall discharge the trustee from liability. A provision of this type is effective,
provided (i) the other person in giving approval acts neither in bad faith nor in casual disregard of the interests or rights of the
nonassenting beneficiaries and (ii) the accounting appropriately discloses material issues about the trustee’s conduct. (The
provision does not eliminate a beneficiary’s right to information under § 82.) The designated person’s approval, however, is
subject to court review for abuse, with particular attention (see (i) above) to neglect or to the possible effects of a conflict of
interests between that person and a beneficiary (or even to a settlor’s disregard of beneficiary rights that the settlor has no
power to modify). This review is available to a beneficiary regardless of a trust provision to the contrary, such as one
purporting to make the trustee’s discharge final or conclusive upon the designated person’s approval (cf. § 87). The
beneficiary’s right of review, however, is subject to the doctrine of laches or an applicable period of limitation (see § 98).

Reporter’s Notes on § 83

This Section and its commentary are generally similar to Restatement Second, Trusts § 172, although the commentary here is
somewhat more specific than that in the prior edition and makes clear that an accounting or report (or recent copy) normally
is to be provided if requested by a beneficiary (merely an application of the principles of § 82(2) to the accounting context).

See also IIA William A. Fratcher, Scott on Trusts, § 72 (4th ed. 1987); and George G. Bogert & George T. Bogert, The Law of
Trusts and Trustees §§ 962-974 (rev. 2d ed. 1983), and also see § 395 (pp. 303-306, on charitable trusts).

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§ 83Duty to Keep Records and Provide Reports, Restatement (Third) of Trusts § 83 (2007)

Comment a and a(1):

The often-cited case of Wood v. Honeyman, 178 Or. 484, 555-556, 169 P.2d 131, 162 (1946), 171 A.L.R. 587, stated:
It must be apparent that when one becomes a trustee …, he must maintain records of his transactions so
complete and accurate that he can show by them his faithfulness to his trust. It is not enough for him to
know that he is honestly performing his duty. Since, generally, the burden of proof rests upon him to
prove his fidelity, he must be able to sustain his position by honest records. Bogert on Trusts and
Trustees, § 962, says: “It is the duty of the trustee to keep full, accurate and orderly records of the status
of the trust administration and of all acts there under…. The general rule of law applicable to a trustee
burdens him with the duty of showing that the account which he renders and the expenditures which he
claims to have made were correct, just and necessary…. He is bound to keep clear and accurate accounts,
and if he does not the presumptions are all against him, obscurities and doubts being resolved adversely
to him….”

For a case affirming a trial court’s order requiring a trustee to pay the expense of employing an accountant when the
expenditures were made necessary by the inadequacy of the trustee’s records, see Miller v. Pender, 93 N.H. 1, 34 A.2d 663
(1943).

Comment b:

On the trustee’s duty to account, see generally Scott on Trusts and Bogert & Bogert references, supra. Also see Lewis v.
Clifton, 837 N.E.2d 1016 (Ind. App. 2005) (remainder beneficiary whose interest was “subject to divestment” was entitled to
demand an accounting). The trustee’s duty to render accounts or a report is not limited to “fairly representative” beneficiaries;
see § 82(2), id., Comment e, and id., Reporter’s Note to Comment a(1). See, however, Marshall & Ilsley Trust Co. v.
Woodward, 848 N.E.2d 1175 (Ind. App. 2006) (recognizing “remote” named contingent-remainder beneficiary’s right to an
accounting, but dictum (at 1184) would limit rights of some others based on misapplication of UTC § 813(a) and comment to
id. § 103 (13)).

Charles E. Rounds, Jr., Loring: A Trustee’s Handbook § 6.1.5.2 (8th ed. 2006), aptly summarizes much of the content of this
Section and its commentary, stating:
An incident of the trustee’s general duty to account and … to provide information is
the trustee’s duty to keep written accounts that show the nature, amount, and
administration of the trust property. All doubts are resolved against a trustee who
does not keep accurate accounts…. [¶]A trust provision that states that the trustee
does not have to account will not be enforced … as being against public policy…. [¶]
Jurisdictions will vary as to the necessary form of an account…. [¶] The beneficiary
may demand an accounting. Compelling an accounting is within the jurisdiction of a
court of equity. [¶] The trustee is entitled periodically to a discharge of liability by
means of the judicial settlement of accounts…. [¶] A careful examination of local
statute and case law should be made to determine the extent to which the judicial
allowance of the trustee’s account acts as a discharge from further obligation for the
transaction covered thereby…. The procedure followed in most states provides for
the appointment of a guardian ad litem to represent persons unborn or unascertained

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and often to represent persons under some legal disability…. [¶] [I]nstruments often
provide for periodic accounting in a nonjudicial setting, with discharge of further
liability upon assent of certain adult beneficiaries. Some provide for release upon the
beneficiary’s failure to object within a certain period…. It is unsettled whether, in a
nonjudicial setting, the assent of present beneficiaries can bind future [and minor]
beneficiaries….

A joint project of the American Bar Association, American Bankers Association, American College of [then] Probate
Counsel, American Institute of Certified Public Accountants, National Center for State Courts, National College of Probate
Judges, and the Uniform Probate Code Project, entitled “Report of Fiduciary Accounting Standards Committee” (1980) (Prof.
Robert Whitman, Reporter), describes certain general standards for fiduciary accounting. These included (inter alia): that
accounts should be stated in a manner that is understandable to persons not familiar with practices and terminology of estate
and trust administration; that sufficient information be provided to put interested parties on notice regarding significant
transactions during the accounting period; and that an account is incomplete unless it shows both carrying (acquisition)
values and current values (at the beginning and end of the accounting period), plus significant transactions that do not affect
the amount for which the fiduciary is accountable.

On the duty to account at termination or at the end of a fiduciary’s period of administration, compare Estate of Fain, 75
Cal.App.4th 973, 992, 89 Cal.Rptr.2d 618, 632 (1999) (review denied 2000) (involving a failure to provide a terminal
accounting for a decedent’s estate), which noted that the original administrator “had failed to marshal all of the estate’s assets
and had failed to file a full and complete inventory, thereby necessitating the estate to undertake an extensive discovery in
order to identify estate assets” and concluded: “Extraordinary services performed by the [successor] administrator and its
counsel in the segregation of its assets, reconstruction of inventories from documents and other evidence, and other problems
of processing an estate which are the direct consequences of the [prior] administrator’s negligence are an element of
surcharge.”

Comment c:

In In re Hunter, 6 App. Div. 3d 117, 775 N.Y.S.2d 42 (2004), aff’d, 4 N.Y.3d 260, 794 N.Y.S.2d 286, 827 N.E.2d 269 (2005),
on the death of the income beneficiary of one of two testamentary trusts, a bank judicially settled its accounts as co-executor
and as co-trustee of one of the trusts, the remainder of which was added to the second trust. Thereafter, on the death of its co-
trustee, the bank filed an intermediate account for the second trust. After giving her waiver and consent to this account, the
income beneficiary of the second trust was allowed by the Surrogate to withdraw the waiver and consent and to object to the
account, based on the bank’s failure (as trustee of the second trust) to object to its own failure (as executor and then trustee)
to diversify the investments (which declined greatly in value) in the estate and the first trust. A divided Appellate Division
modified the Surrogate’s decree and dismissed the beneficiary’s objections to the bank’s failure to contest its own prior
accountings. The objectant had received notice of the prior accountings (in accordance with SCPA § 2210(10), requiring
notice to all persons interested in a trust when a trustee accounts to itself in a separate fiduciary capacity), so the prior decrees
were held to be res judicata. In the view of the majority, the beneficiary’s objections could have been fully aired in the earlier
accountings of which the beneficiary had notice. The Court of Appeals unanimously affirmed the Appellate Division
decision.

In In re Enger’s Will, 225 Minn. 229, 30 N.W.2d 694 (1948), the court stated as the primary question whether a prior order

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allowing the trustees’ account was res judicata. The court noted that the applicable statute “provides that a trustee may file
and petition the court for the settlement and allowance of any account, whereupon the court shall settle the matter for hearing
and give notice thereof as therein provided; and that [the court order after hearing] ‘shall be final and conclusive as to all
matters thereby determined and binding in rem upon the trust estate and … all beneficiaries, [subject to timely] appeal to the
supreme court….’ ” But the opinion further noted that the finality and conclusiveness of the order applies only “to all matters
thereby determined” with the issues “framed by the account and petition and the objections thereto…. Here, since there were
no objections to the annual accounts, the matters determined by the orders allowing the annual accounts were those put in
issue by the accounts and the petitions…. [¶] Self-dealing by a trustee is not a matter involved in an accounting proceeding
by a trustee where the account and the petition … do not apprise the beneficiaries of the fact. It is the trustee’s duty to
disclose to the beneficiary fully, frankly, and without reservation all facts pertaining to the trust…. That being true, the duty
rests on the trustee in accounting proceedings to make the fullest measure of disclosure…. [¶] Because the beneficiary may
rely upon the disclosures in the trustee’s account and the petition for its allowance, a proceeding for the allowance of the
account does not impose upon the beneficiary as an ordinary adversary the burden of making his own inquiry to ascertain the
truth of the trustee’s disclosures. The beneficiary may accept them as true. In this respect the rule is different from what it is
in ordinary litigation, where the parties are not only adversary, but where there is no fiduciary relationship…. [¶] From what
has been said it must be apparent that the orders allowing the trustees’ annual accounts are not res judicata as to self-dealing
by the trustees…. This is the rule independent of statute…. It has been held that where an investment is listed in the account,
but the facts showing its illegality are not, the order is not res judicata as to the question of illegality of the investment,
because the mere listing of it fails to apprise the beneficiaries of the fact of illegality….” (id. passim). See also In re Account
of Trustees Under Will of Sophie E. Hubbell, 302 N.Y. 246, 97 N.E.2d 888 (1951), 47 A.L.R.2d 176 (all stock of corporation
held by trustees either individually or as trustees; decree settling their accounts not res judicata because of failure to reveal
that corporation itself was purchaser of trust stock); and Matter of Freihofer, 172 Misc.2d 260, 658 N.Y.S.2d 811 (Sur. 1997)
(accounting compelled despite the beneficiary’s release because of trustee’s inadequate disclosure).

See generally M.R. Moore, “Finality in Probate and Trust Proceedings—Making Your Judgments Stick,” 9 Probate &
Property 21 (July/Aug. 1995).

On the troublesome matter of informal accountings and their effects, see D. Westfall, “Nonjudicial Settlement of Trustees’
Accounts,” 71 Harvard L. Rev. 40 (1957). For a statutory authorization, and a possible model for private authorizations in
trust instruments, see Uniform Trust Code § 111, together with Article 3 (§§ 301- 305) on “Representation by others.”

Statutes in Illinois (F.H.A. 760 ILCS 5/11) and Missouri (Mo. Rev. Stat. § 456.220) provide that a beneficiary’s cause of
action for breach of trust is barred in the event the beneficiary does not bring suit within, respectively, three years (Illinois) or
five years (Missouri) if the beneficiary received a final accounting from the trustee on termination of the trust. Comparable
statutes have been enacted in some other states. Cf., e.g., Calif. Prob. C. § 16461. See also, in a statute of this type, in
defining its requirement of “a report that adequately discloses the existence of a potential claim for breach of trust,” Mich.
C.L.A. § 700.7307(3) (section added by Public Act No. 314, 2004) states: “A report adequately discloses the existence of a
potential claim for breach of trust if it provides sufficient information so that the beneficiary or representative knows of the
potential claim or should have known of its existence.”

Comment d:

A beneficiary of an irrevocable trust was allowed to compel even a settlor-trustee to account in In re Kassover, 124 Misc.2d
630, 476 N.Y.S.2d 763 (Sur. Ct. 1984), disregarding, on public-policy grounds, a trust term providing that the settlor-trustee

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was accountable only to himself.

The court in In re Crane, 266 App. Div. 726, 41 N.Y.S.2d 940 (1943), disregarded a provision stating that the “written
acceptance of the [income] beneficiary … of the correctness of any account rendered by the Trustee shall constitute a final
and complete discharge of said Trustee in respect of the matters covered” by the account, holding that the clause could not
deprive the remainder beneficiaries of the right to question actions of the trustee, agreeing with the lower court ( 34 N.Y.S.2d
9, 14) that the possibilities for collusion were obvious and could not only deny the remainder beneficiaries’ their rights but
also frustrate the settlor’s intention. See also Matter of Odmark, N.Y. L.J. 29 (Surr. Ct. Feb. 5, 1996).

Similarly, Briggs v. Crowley, 352 Mass. 194, 224 N.E.2d 417 (1967), held that provisions purporting to relieve the trustees
altogether of their normal duty to account were contrary to public policy and invalid as an effort to deprive the court of its
jurisdiction and the beneficiaries of standing to compel the trustees to show their faithful performance of their duties.

In Wood v. Honeyman, 178 Or. 484, 169 P.2d 131 (1946), the trust instrument expressly relieved the trustee “from all
obligations to account to the beneficiaries of this trust, or to any one, for any of the trust funds or income therefrom.” The
opinion forcefully observed that the settlor “did not make a gift to the defendant” but “refers to [him] many times as trustee
and repeatedly uses the word ‘trust.’ Although the legal title to the fund was in the defendant, the beneficial interest was not
in him but in three beneficiaries…. The law attaches such great social value to trusts of the kind now before us that virtually
every duty owed by a trustee is enforceable by a decree of the chancellor…. For a violation of any of [his] duties, a court of
equity could remove the defendant from his office, deny him compensation for his services or enter judgment against him for
any sum misspent. But remedies of that kind normally are not feasible unless an accounting has first been had…. [¶] If a
fiduciary can be rendered free from the duty of informing the beneficiary concerning matters of which he is entitled to know,
… equity has been rendered impotent. The present instance would be a humiliating example of the helplessness into which
courts could be cast if a provision, placed in a trust instrument through a settlor’s mistaken confidence in a trustee, could
relieve the latter of a duty to account. Such a provision would be virtually a license to the trustee to convert the fund to his
own use and thereby terminate the trust. When we mentioned mistaken confidence, we had in mind the words of the Wood
Trust instrument: ‘I think David Honeyman would be an ideal trustee.’ It was that mistaken impression … which the
defendant now seeks to employ as an impenetrable shield.” Id. at 559-561, 169 P.2d at 163-164.

The opinion continued: “We are completely satisfied that no trust instrument can relieve a trustee from his duty to account in
a court of equity. We are, however, prepared to [accept] that a trust instrument may lawfully relieve a trustee from the
necessity of keeping formal accounts. When such a provision is found in a trust instrument, a beneficiary can not expect to
receive reports concerning the trust estate. But even [then] the trustee will … be required in a suit for an accounting to show
that he faithfully performed his duty and will be liable for whatever remedies may be appropriate if he is unfaithful to his
trust….” Id. at 566, 169 P.2d at 166.

Cf. Shields v. Shields, 264 Ga. 559, 448 S.E.2d 436 (1994), requiring a legal life tenant (testator’s widow) to account for her
“quasi-trusteeship” despite a will provision purporting to excuse accounting.

In Jacob v. Davis, 128 Md.App. 433, 738 A.2d 904 (1999), a will (creating a Marital Trust and a Family Trust) provided: “My
Trustee shall be excused from filing any account with any court; however, my Trustee shall render an annual (or more
frequent) account and may, at any other time, including at the time of the death, resignation, or removal of any Trustee,
render an intermediate account of my Trustee’s administration to such of the then current income beneficiaries who are of
sound mind and not minors at the time of such accounting. [Sic—There was and had only been a single current beneficiary,
testator’s surviving spouse—consider what this might suggest about the deliberations and practices through which clauses of

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this type sometimes become a part of a trust’s provisions.] The written approval of such accounting by all such income
beneficiaries shall bind all persons then having or thereafter acquiring or claiming any interest in any trust, and shall be a
complete discharge to my Trustee with respect to all matters set forth in the account as fully and to the same extent as though
the account had been judicially settled in an action or proceeding in which all persons having, acquiring, or claiming any
interest were duly made parties and were duly represented.” The court’s opinion states: “The leading authorities on trusts are
unequivocal in their articulation of the right of the remainder beneficiary to an accounting during the lifetime of the income
beneficiary and after his or her death” and quotes from Scott on Trusts, supra, § 172, that if a trustee “fails to keep proper
accounts, all doubts will be resolved against him” and that the trustee must not only keep accounts but “must render an
accounting when called on to do so at reasonable times by the beneficiaries. Where there are several beneficiaries any one of
them can compel an accounting by the trustee. The fact that a beneficiary has only a future interest … does not preclude him
from compelling the trustee to account.” The opinion then quotes from Bogert & Bogert, supra, § 961, that a “beneficiary is
entitled to demand of the trustee all information about the trust and its execution for which he has any reasonable use”
provided “these requests are made at a reasonable time and place and not merely vexatiously.” The opinion further notes that
Restatement Second, Trusts § 172, Comment c, states that a trustee may be compelled to “account not only by a beneficiary
presently entitled to the payment of income or principal, but also by a beneficiary who will be or may be entitled to receive
income or principal in the future” (emphasis added). Id. at 447-449, 738 A.2d at 911-912.

In further observing that Maryland law is consistent with treatise law, the Jacob v. Davis court quoted from In re Clarke’s
Will, 198 Md. 266, 273, 81 A.2d 640, 644 (1951), holding that a contingent remainderman had standing to seek an
accounting, explaining that if the petitioner “has any interest at all he is entitled to invoke the court’s protection.” Id. at 449-
450, 73 A.2d at 912.

The court in Jacob v. Davis also observed that, to its knowledge, no Maryland appellate decision had addressed the extent to
which a settlor may limit the common-law duty of a trustee to account in a court of equity. Again, the opinion quotes from
Bogert & Bogert, supra, § 973: “A [settlor] who attempts to create a trust without any accountability in the trustee is
contradicting himself. A trust necessarily grants rights to the beneficiary that are enforceable in equity…. If the court finds
that the settlor really intended a trust, it would seem that accountability in chancery or other court must inevitably follow as
an incident. Without an account the beneficiary must be in the dark as to whether there has been a breach of trust….” The
court noted the inherent conflict of interest between income and remainder beneficiaries, particularly with respect to matters
such as were then before the court, quoting from an earlier case to the effect that laches that might be chargeable to an income
beneficiary regarding trustee misconduct would not bind a remainder beneficiary. The court then refused to “interpret the
provision in … the will that the trustee ‘shall be excused from filing any account with any court’ to mean that the testator
intended to remove the jurisdiction of a court of equity to require an accounting upon the reasonable request of a beneficiary.”
Id. at 450-451, 738 A.2d at 912-913.

California Probate Code § 16461 (enacted in 2004) authorizes the settlor to insert a provision in the terms of a trust
purporting to relieve the trustee of liability for a breach of trust if the beneficiary fails to object to an account or report within
a settlor-stated period of time (with a minimum period of 180 days, plus specified procedural safeguards).

For a constructive criticism (of particular relevance here) of the District of Columbia’s 2001 statutory departure from the
UTC in allowing a “surrogate” to receive information and to protect the interests of beneficiaries, see K. Millard, “The
Trustee’s Duty to Inform and Report Under the Uniform Trust Code,” 40 Real. Prop., Prob. & Trust J. 373, 398-401 (2005).

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Case Citations - by Jurisdiction

0 C.A.3

0 Ct.Fed.Cl.

0 D.D.C.

0 D.Me.

0 Ill.App.

0 Ind.App.

0 Ky.

0 Md.

0 Neb.

0 Neb.App.

C.A.3

C.A.3, 2012. Cit. in disc. The U.S. Secretary of Labor brought an action against, among others, trustee of a health benefit
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plan governed by ERISA, alleging, inter alia, that trustee breached her fiduciary duties to the plan when she failed to act
prudently to prevent the improper diversion of monies from the plan. Following a bench trial, the district court entered
judgment for defendants. Vacating and remanding, this court held that the trial court failed to make appropriate findings as to
which, if any, of the diverted monies were plan assets, and, if any of those monies were plan assets, whether trustee breached
her fiduciary duties relating to those assets. The court explained that ERISA incorporated the fiduciary standards of trust law,
including the duty to maintain financial records and to preserve and protect the assets of the plan, as well as the duty, when
confronted with suspicious circumstances, to investigate potential risks to the plan; if trustee violated any of these duties, then
she might be liable for any resulting loss of plan assets. Secretary of Labor v. Doyle, 675 F.3d 187, 202.

Ct.Fed.Cl.

Ct.Fed.Cl.2011. Cit. in ftn. Native American tribe sued the United States, seeking damages for the government’s alleged
mismanagement of the tribe’s trust funds and resources. This court granted the government’s motion to dismiss, holding that
it lacked jurisdiction under the Indian Tucker Act, because on the same day plaintiff filed this action, plaintiff also filed a
separate action against the government in the United States District Court for the District of Columbia based on substantially
the same operative facts. The court noted that both complaints alleged that the government owed the tribe similar fiduciary
duties, including a trustee’s fiduciary duties of prudence and loyalty and a trustee’s duty to provide an accounting. Coeur
d’Alene Tribe v. U.S., 102 Fed.Cl. 17, 22.

Ct.Fed.Cl.2009. Cit. in sup. §§ 82-83. Native American tribe sued United States, seeking an accounting and damages related
to the government’s alleged breach of fiduciary duties by mismanaging the tribe’s trust assets and other funds. This court
granted in part plaintiff’s motion to compel the production of documents that defendant claimed were protected by the
attorney-client privilege or the work-product doctrine or both, holding, inter alia, that certain of the documents were subject
to the fiduciary exception to the attorney-client privilege and had to be produced on that basis. The court noted, among other
things, that, in tribal trust cases, defendant’s conduct had to be judged by the most exacting fiduciary standards, and thus
defendant was obliged to preserve and maintain trust assets and to provide the beneficiaries with information regarding the
management of their trusts. Jicarilla Apache Nation v. U.S., 88 Fed.Cl. 1, 6.

D.D.C.

D.D.C.2008. Quot. in disc. Following this court’s earlier finding that the Department of Interior breached its duty under the
Indian Trust Fund Management Reform Act of 1994 to produce an accounting for Individual Indian Money account holders,
and that the record demonstrated the impossibility of rendering such an accounting, plaintiffs moved for equitable relief in the
form of restitution of monies collected for their benefit. This court held, inter alia, that plaintiffs’ claim for money withheld
was a claim for specific relief within the waiver of sovereign immunity for actions seeking relief other than money damages,
and thus was within the court’s jurisdiction. Although mindful of the settled trust principle that a trustee had a responsibility
to keep accurate records, and that presumptions would run against him when he could not comply, the court rejected
plaintiffs’ position that every disbursement to a beneficiary had to be proven by a check or similar documentation, deciding
that statistical modeling was acceptable and the best available data should be used. Cobell v. Kempthorne, 569 F.Supp.2d
223, 249.

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§ 83Duty to Keep Records and Provide Reports, Restatement (Third) of Trusts § 83 (2007)

D.Me.

D.Me.2014. Cit. in disc. Settlor, beneficiary, and successor trustee of an irrevocable life-insurance trust sued former trustee,
who was a friend of settlor and an agent of the insurer that issued the life-insurance policy held by the trust, asserting various
claims related to defendant’s part in the selection and sale of the policy to the trust and the performance of her fiduciary
duties as trustee. This court granted summary judgment for defendant, holding that plaintiffs failed to demonstrate genuine
issues of material fact as to whether defendant committed a breach of trust and whether plaintiffs were entitled to any
damages. In making its decision, the court noted that that the common law of trusts imposed various fiduciary duties on
trustees, including the duty to keep records and provide reports, as set forth in Restatement Third of Trust § 83. Noveletsky v.
Metropolitan Life Ins. Co., Inc., 49 F.Supp.3d 123, 140.

Ill.App.

Ill.App.2008. Com. (d) cit. and quot. in disc. Trustee filed an action against beneficiaries of the trust, seeking a declaration
that the trust accounts were approved under a provision of the trust providing that approval by a majority of beneficiaries had
the same effect as court approval. The trial court granted summary judgment for trustee. Reversing and remanding, this court
held that the provision was unenforceable as a matter of public policy, because it would allow majority approval to insulate
the trustee from liability for serious misconduct; exculpatory clauses in trust instruments were not enforceable as to breaches
of trust committed in bad faith or intentionally or with reckless indifference to the interest of the beneficiary. Vena v. Vena,
387 Ill.App.3d 389, 392, 393, 395, 396, 400, 326 Ill.Dec. 305, 308, 309, 311, 314, 899 N.E.2d 522, 525, 526, 528, 531.

Ind.App.

Ind.App.2006. Quot. in disc., coms. cit. generally in disc. (T.D. No. 4, 2005). Contingent beneficiary of an irrevocable trust
funded by life-insurance policies sued trustee, requesting an accounting of the trust. Affirming the trial court’s grant of
summary judgment for beneficiary, this court held, as a matter of first impression, that a named remote contingent beneficiary
was entitled to a trust accounting under applicable Indiana statutes; thus, the trial court correctly concluded that plaintiff, who
was named as a contingent beneficiary in the instant trust, could receive an accounting. Marshall & Ilsley Trust Company,
N.A. v. Woodward, 848 N.E.2d 1175, 1183.

Ky.

Ky.2013. Com. (b) quot. in sup. and cit. in ftn. After the Kansas General Assembly repealed a statute mandating that
testamentary trustees make a choice of compensation between either an annual fee or a fee at the termination of the trust,
trustees of three testamentary trusts brought a declaratory-judgment action against beneficiaries of those trusts, seeking a
judicial determination of whether the repeal of the statute affected trustee compensation for trusts like the ones they
administered, which were in existence for many years before the statute was repealed. The trial court ruled that trustees were

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§ 83Duty to Keep Records and Provide Reports, Restatement (Third) of Trusts § 83 (2007)

not bound by the constraints of the former statute, and the court of appeals affirmed. Affirming, this court held that trustees
were entitled to seek reasonable fees on trusts that predated the repeal of the statute. The court noted that its decision did not
unleash trustees to charge exorbitant or arbitrary fees as they saw fit; it was accepted that a trustee’s duty to keep
beneficiaries reasonably informed of the trust and its administration could be satisfied by relatively informal reports, and
beneficiaries were granted, by statute, the right to challenge the compensation of the trustee. Jarvis v. National City, 410
S.W.3d 148, 158.

Md.

Md.2012. Com. (c) quot. in sup. Beneficiaries of a testamentary trust sued trustee, alleging, among other things, that trustee
improperly demanded that each beneficiary execute a broad release and indemnification agreement prior to distribution of the
trust assets. The trial court granted summary judgment for trustee, and the court of appeals affirmed. Affirming, this court
held, among other things, that trustee’s request for execution of the agreement did not constitute a breach of fiduciary duty
and that the agreement was not overbroad in contravention of state statutory or common law. The court reasoned that the
terms of the agreement closely tracked the terms that trustee would have received had it petitioned for and received a court
order formally approving the accounting and termination of the trust, because a court order approving all or part of a trustee’s
accounts discharged the trustee from liability for matters appropriately disclosed. Hastings v. PNC Bank, NA, 54 A.3d 714,
727, 728.

Neb.

Neb.2014. Cit. in sup., cit. in ftn.; coms. (a) and (a)(1) quot. in sup. and cit. in ftn.; Rptr’s Note cit. in sup. and in ftn.
Beneficiary of her grandfather’s trust filed a complaint against trustees, alleging that trustees breached their fiduciary duties
to maintain trust records, to properly inform and report to the beneficiaries, and to administer the trust in good faith. After a
bench trial, the trial court dismissed plaintiff’s complaint. The court of appeals affirmed. Affirming in part, this court held
that, although defendants’ conduct in failing to properly account and maintain trust records fell below acceptable standards,
that breach was essentially harmless, because plaintiff failed to prove that the trust or beneficiaries were harmed, and the
available records and evidence showed that the trust received all necessary payments from one trustee/defendant who had
purchased a ranch from the trust, and that defendants appropriately managed the money. In re Rolf H. Brennemann
Testamentary Trust, 288 Neb. 389, 395, 399, 849 N.W.2d 458, 463, 465.

Neb.App.

Neb.App.2013. Quot. in sup., coms. (a) and (a)(1) quot. in sup., Rtpr’s Note to coms. (a) and (a)(1) quot. in sup. Beneficiary
of a testamentary trust established by decedent sued trustees to compel an accounting of the trust’s assets and liabilities,
alleging, inter alia, that trustees failed to maintain adequate records and breached their fiduciary duty to administer the trust
in good faith. After a bench trial, the trial court found in favor of trustees. Affirming, this court held that, even though trustees
breached their duty to inform and report during the time period from when the will and trust came into effect through the
death of decedent’s last surviving child, upon which event the corpus of the trust was to be distributed to decedent’s
grandchildren, that breach caused no damage to the trust and was harmless. The court noted that, under Nebraska law, the

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remedy for a trustee’s violation of a fiduciary duty ranged from compelling the trustee’s performance to monetary redress to
restoring the trust. In re Rolf H. Brennemann Testamentary Trust, 21 Neb.App. 353, 367, 368, 370, 838 N.W.2d 336, 346,
348.

Restatement of the Law - Trusts © 1935-2016 American Law Institute. Reproduced with permission. Other editorial
enhancements © Thomson Reuters.
End of Document © 2017 Thomson Reuters. No claim to original U.S. Government Works.

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