UPDATES & ANALYSIS

Beneficiaries of Revocable Trusts Have No Right to Accounting of Trust Activities Prior to Settlor’s Death

by Ryan Koopmans | January 25, 2013

By Ryan Koopmans

Today, the Iowa Supreme Court ruled that a beneficiary of a revocable trust has no right to obtain an accounting of trust activities that occurred while the trust’s settlor was alive and competent, even when someone other than the settlor is serving as trustee of the trust. Rather, the trustee’s duty to account runs solely to the settlor.

The Court’s opinion emphasized the settlor’s interest in privacy and the lower expenses of trust administration as compared to estate administration, two of the most common reasons people create revocable trusts, and noted that both of those interests would be compromised by a ruling that granted accounting rights to beneficiaries other than the settlor.  The Court also noted that a beneficiary under a will has no right to obtain information about the decedent’s financial transactions prior to death. Since a revocable trust is a common will substitute, the beneficiaries’ rights under a revocable trust should be comparable to those under a will.

Finally, the Court reversed the district court’s ruling that held the trustee personally liable for her attorney fees incurred in defending her refusal to account, as well as the beneficiary’s attorney fees incurred in pursuing the accounting.  Since the trustee’s position was reasonable and she was ultimately the prevailing party on the accounting issue, the court ordered her fees to be paid from the trust.  Meanwhile, the beneficiary was ordered to pay her fees personally.  It surely did not help the beneficiary’s cause that of the sixteen other trust beneficiaries, fourteen sided with the trustee and none with the beneficiary.

The case, which you’ll be shocked to learn was a family dispute “grounded on pre-existing animosity” between the trustee and beneficiary (who are sisters), is In re Trimble.

Tags: Iowa Supreme Court Opinions