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A Trustee is Not Communicating With the Beneficiaries – Is That Allowed?

When a trustee is not communicating with beneficiaries, they feel slighted and disrespected. They feel that the trustee is hiding something from them. And they feel that the trustee might be making mistakes or stealing money from the estate.

It is clear that beneficiaries get upset when the trustee is not communicating with them. What is not as clear, however, is how much of a duty to “communicate” a trustee actually has.

A trustee is a fiduciary, meaning that he has a duty to exercise the utmost good faith and undivided loyalty toward the beneficiaries throughout the relationship.[1] Does the duty to exercise “good faith and undivided loyalty” include a duty to communicate? A trustee “must act in accordance with the highest principles of morality, fidelity, loyalty and fair dealing.” [2] Does the trustee’s failure to communicate violate those principles? Here are a few scenarios that shed more light on this issue.

Sometimes the trustee simply does not know that the beneficiaries expect to be communicated with. This is especially true for a first-time trustee. If that is the case, a phone call, email or letter may clear up this misunderstanding.

Some trustees are just not good communicators. They think that as long as they are doing everything right, they do not have to advise the beneficiaries and can just ignore them.

A trustee who has not been appointed might think that it’s too early to communicate anything substantial to the beneficiaries since he has not started doing anything yet.

At the same time, some trustees relish the feeling of power and control they have as the trustee, and they want to extend that feeling into an ability to keep the beneficiaries in the dark. And some trustees actually go as far as to steal from the estate.

Someone who has been nominated as the trustee by the will but is not yet appointed by the court might think that they are not a trustee yet. The law states that “a trustee named in a will has no power to dispose of any part of the estate of the testator before letters testamentary or preliminary letters testamentary are granted, except to pay reasonable funeral expenses, nor to interfere with such estate in any manner other than to take such action as is necessary to preserve it. [3] A trustee who has not been appointed might think that it’s too early to communicate anything substantial to the beneficiaries since he does not even have the power to do anything yet.

What recourse do beneficiaries have when they feel that the trustee is hiding information and not communicating with the beneficiaries because the trustee is mismanaging the estate or is stealing money from the estate? The beneficiaries can bring a proceeding to have the judge of the Surrogate’s Court compel the trustee to file an account of the estate. [4] If ordered to submit an accounting, the trustee will have to submit it to the court, usually within thirty to sixty days.

The accounting is a set of schedules that include all possible information about the estate, including an itemized list of the assets that are in the estate, the funds or property received by the estate, the expenses of the estate, the beneficiary distributions already disbursed and the beneficiary distributions yet to be disbursed. The beneficiaries can review the schedules and decide that they are satisfied with the information. Or the beneficiaries can compel the trustee to provide all of the documents associated with the estate as well as sometimes the trustee’s personal documents. They can ask for things like account statements, closing statements, tax returns, loan applications etc.

Every trustee who is not communicating with beneficiaries needs to realize that even though in the short term they can hold off beneficiaries requests for information, beneficiaries do get their information eventually, whether the trustee wants it or not. It is better for the trustee to not upset the beneficiaries and to communicate with the beneficiaries. Avoiding acrimony means saving having go through the stress and expense of litigation.

If your trustee is not communicating with you or is withholding information, or if you are a trustee and you think that the beneficiaries are wrongly accusing you of misconduct, you can get in touch with me. I am New York estate lawyer Albert Goodwin and I can be reached at (212) 233-1233.

[1] Leon C. Lazer, et al., New York Pattern Jury Instructions – Civil § 3.59 (2d ed. 2006); see also Sokoloff v. Harriman Estates Development Corp., 96 N.Y.2d 409, 416, 754 N.E.2d 184, 729 N.Y.S.2d 425 (N.Y. 2001); Lamdin v. Broadway Surface Advertising Corp., 272 N.Y. 133, 138, 5 N.E.2d 66, 67 (N.Y. 1936);

[2] In re Estate of Naumoff, 301 A.D.2d 802, 803, 754 N.Y.S.2d 70 (3d Dep’t 2003).

[3] NY EPTL § 11-1.3

[4] NY SCPA § 2205

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New York City Estate Lawyer Albert Goodwin, Esq.
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