Beneficiaries' Rights to Trust Information and Accountings in New York

A beneficiary of a New York trust does not have to take the trustee’s word for it. A trustee holds property for other people, and the law that makes them a fiduciary also obliges them to keep those people reasonably informed: what the trust says, what it owns, how it is invested, what has been paid out and to whom, and what the trustee is being paid. Those rights exist whether or not anyone has asked for a formal accounting, and they are the first thing to use when something seems off. This page describes what a beneficiary is entitled to know, where the duty to inform stops, how to ask, and what to do when the answer is no. It is part of our trust and estate accounting section.

What a Trust Beneficiary Is Entitled to Know

The trust instrument

You are entitled to know that the trust exists, that you are a beneficiary, and who the trustee is, and to see the document that governs it. For a trust under a will, the will is a public record in the Surrogate’s Court once it is admitted to probate, and anyone can obtain a copy. For a lifetime trust, the trustee should furnish the trust agreement and its amendments to the beneficiaries on request. Where an instrument creates several separate trusts or contains provisions for other people that have nothing to do with your interest, a trustee may reasonably furnish the portions that concern you, but the provisions that define your interest, the trustee’s powers, and the administrative terms are yours to see in full. You cannot evaluate anything else without the instrument, so ask for it first.

The assets and their values

What the trust holds, in what accounts, and what it is worth: the assets that funded it and their values at funding, and the current holdings and their values. For real estate, whether it is rented or occupied and by whom. For a closely held business interest, what the trust’s share is and what information the trustee receives from the business.

Investments and their performance

How the principal is invested, who manages it, what the investment policy is, and how the portfolio has done. A trustee is held to EPTL 11-2.3, the Prudent Investor Act, which looks at the portfolio as a whole, diversification, risk and return, and the needs of the income beneficiaries and remaindermen. Brokerage statements are the starting point, and a beneficiary is entitled to ask why a position was kept, sold or bought. The standard is conduct, judged at the time, not results, so a trustee who can explain the reasons for a decision has answered the question even if the decision turned out badly.

Distributions to others, where they affect you

Where the trust is a single fund and a distribution to one beneficiary reduces what is left for the others, each beneficiary is entitled to know what has been paid out and to whom. A remainderman may ask what principal has been paid to the income beneficiary, and on what authority in the instrument. Where a trustee has discretion to distribute among a class, the members of the class are entitled to know how the fund has been used, even if the trustee is not obliged to justify each choice.

Trustee compensation

What the trustee has taken in commissions, how it was computed, and whether it was charged to income or principal. A trustee who takes annual commissions without a court order must give the beneficiaries a yearly statement under SCPA 2309 showing the principal and income and the computation. Corporate trustees charge under their published fee schedules, which a beneficiary may ask to see. See trustee commissions. The same goes for attorney’s fees and other professional fees paid from the trust; the court can review them under SCPA 2110 on a beneficiary’s application.

Events that affect your interest

The sale of the trust’s real estate, a change of trustee, a decision to keep or sell a concentrated holding, litigation involving the trust, and the death of a beneficiary that changes who takes. A trustee who tells the beneficiaries about these things as they happen is doing the job; one who lets them find out years later, in an accounting, is inviting objections.

The Duty to Inform and Its Limits

The duty is one of reasonable information, not unlimited access, and there are real limits.

Discretionary trusts. Where the trustee has discretion over whether and how much to distribute, a beneficiary is entitled to know the terms of that discretion and what has been done with the fund, and to have the trustee actually consider a request in good faith. The beneficiary is not entitled to a particular distribution, and a court will not substitute its judgment for the trustee’s unless the discretion was abused or not exercised at all. A trustee who never responds to requests, or who applies a standard the instrument does not contain, has crossed that line.

Spendthrift provisions. Most New York trusts prohibit a beneficiary from assigning their interest and shield it from the beneficiary’s creditors. That restricts what the beneficiary can do with the interest; it does not restrict what they are entitled to know about it.

Privacy of other beneficiaries. Where an instrument creates separate trusts for different family members, a beneficiary of one is not entitled to the affairs of another. The trustee may also decline to share a beneficiary’s personal circumstances (a medical condition that supported a discretionary distribution, for instance) beyond what the other beneficiaries need to evaluate the administration.

Revocable trusts during the grantor’s life. While the grantor of a revocable trust is alive and competent, the trustee answers to the grantor, and the people named to take at the grantor’s death have no present right to information. Their rights begin when the trust becomes irrevocable.

Time and expense. The trustee is entitled to a reasonable time to respond and to charge the trust with the reasonable cost of responding. A beneficiary who sends a new demand every week will find the court less sympathetic than one who made a clear request and waited.

Information and Accounting Are Different Rights

Information is what you are entitled to on request, continuously, so that you know what is happening. An accounting is the trustee’s sworn statement of the whole administration, in the Surrogate’s Court schedule format, reconciling every receipt and disbursement from the trust’s funding to the present; a trustee need not prepare one until a beneficiary demands it, the trust ends, the instrument requires it or the court orders it. The information rights come first: a beneficiary who has the instrument, the current statements and the answers to a few questions can usually tell whether an accounting is worth demanding, and a trustee who has answered those questions has usually made the demand unnecessary. When the information reveals a problem, or is refused, the accounting is the remedy. See whether a trust accounting is required and whether a trustee has to show an accounting to beneficiaries.

How to Ask

In writing, to the trustee or the trustee’s lawyer, with a short list of what you want: a copy of the trust instrument and amendments; a schedule of the current assets and their values; the bank and brokerage statements for a stated period; a schedule of distributions made to date; and the trustee’s commissions taken and how they were computed. Give a reasonable time to respond and keep proof of delivery. The court’s process for compelling a fiduciary to supply information requires that a written request was made and not answered, so the letter is the foundation of everything that follows. A beneficiary who is not on speaking terms with the trustee, or who does not want to be the one to ask, can have counsel send the letter; the request is a routine part of trust administration, not an accusation.

Remedies When Information Is Refused

A trustee who ignores a written request can be brought before the Surrogate’s Court. For a trust under a will, that is the court that admitted the will and issued letters of trusteeship; for a lifetime trust, it is the Surrogate’s Court of the county where the grantor lived or the trust is administered, or the Supreme Court, and the petition attaches the instrument. The remedies escalate:

1. An order to supply the information. The Surrogate’s Court can direct a fiduciary to furnish specific information relevant to the petitioner’s interest after a written request has gone unanswered. This is the narrow remedy, useful when what is missing is the instrument or the statements rather than a full reconciliation.
2. A petition to compel an accounting under SCPA 2205. The usual remedy. The court orders the trustee to file a full account in the schedule format within a set time; with the account the beneficiary gets the records, may examine the trustee under oath under SCPA 2211, and may object under SCPA 2209. For a testamentary trust the petition is ordinarily entertained seven months after letters issued. See compelling an accounting under SCPA 2205 and when a trustee refuses to give an accounting.
3. Contempt and removal. A trustee who disobeys an order to account or to furnish information can be held in contempt and removed under SCPA 711 and 719, with a successor appointed. Persistent refusal to inform the beneficiaries is itself a ground.
4. Surcharge. When the account, once it arrives, shows losses from imprudent investment, improper expenses, excess commissions or self-dealing, the court charges the trustee personally with the loss. See fiduciary surcharge and breach of fiduciary duty. Where trust property has actually been taken, a discovery and turnover proceeding can recover it.

An example. A mother’s lifetime trust became irrevocable at her death, with her son as trustee, income to him for life and the remainder to his sister’s children. The sister, on her children’s behalf, asks for a copy of the trust and the statements. The son says the trust is “private.” It is not private from the remaindermen. A written demand is followed by a petition in the Surrogate’s Court, which orders the trustee to account. The account shows that the trustee has been paying himself principal as well as income. The remaindermen object, and the trustee is surcharged for the principal distributions the instrument did not permit and replaced by a corporate trustee. The information request was the gateway; you cannot object to what you cannot see.

Pitfalls

• Signing a receipt and release in exchange for a distribution before you have seen the instrument and the account. The release is a contract that bars later objections except for fraud or withheld information. See receipts and releases.
• Asking the bank or the brokerage directly. They will not release trust records to a beneficiary; the records come from the trustee, voluntarily or by court order.
• Treating a discretionary trustee’s “no” to a distribution as a refusal of information. The two are different, and only the second is a breach on its own.
• Waiting. Records are harder to reconstruct, assets are harder to trace, and a trustee who has openly refused for years will argue that the delay counts against you.
• For trustees: answering “it is none of your business.” It is, and saying otherwise to a remainderman is the fastest way into a compulsory accounting with the court reading the correspondence.

If a trustee is not telling you what you are entitled to know, or if you are a trustee deciding how much you have to share, we can tell you where the line is and what the next step should be. Call 212-233-1233 or email [email protected].