When a Trustee Refuses to Give an Accounting in New York: How to Compel One

A trustee who will not account can be made to. A New York trustee does not have to prepare an accounting until a beneficiary asks, but once asked they must, and a trustee who refuses, stalls, or sends a few statements and calls it done can be ordered to account by the Surrogate’s Court under SCPA 2205, held in contempt if they disobey, and removed. This page walks through the escalation for trusts, from the demand letter to the decree: which court, what the order says, what happens to a trustee who ignores it, how decades of records get reconstructed, how time limits work, and what to expect when the account finally arrives. It is part of our trust and estate accounting section.

Step One: The Written Demand

Everything starts with a letter. A written request to the trustee, or to the trustee’s lawyer, identifying the trust, stating that you are a beneficiary, and asking for an accounting in the Surrogate’s Court format from the trust’s funding to date, together with the bank and brokerage statements and a copy of the instrument if you do not have it. Give a reasonable time, and keep proof of delivery. The petition that follows recites the demand and the failure to answer it, and a court is far readier to order an account, and to charge the trustee with the cost of the proceeding, when the record shows the trustee was asked politely and said nothing.

Some non-answers are worth recognizing. “The trust is private” is not an answer to a remainderman. “Here are last year’s statements” is information, not an accounting. “You will get everything when your mother dies” ignores that a remainderman need not wait. Any of these, after a clear written request, is a refusal.

Step Two: The Petition to Compel Under SCPA 2205

SCPA 2205 lists who may petition to compel a fiduciary to account and gives the court the power to order it, on petition or on its own motion. Income beneficiaries, remainder beneficiaries including those whose interest is contingent, co-trustees, successor trustees, the executor of a deceased trustee’s co-trustee, creditors of the trust, and the Attorney General for a charitable interest all have standing. The petition identifies the trust, the petitioner’s interest, the demand and the refusal, and asks the court to direct the trustee to account.

Which court

For a testamentary trust, the petition is filed in the Surrogate’s Court that admitted the will and issued letters of trusteeship. The court has had jurisdiction over the trust since the will was probated, the trust has a file number, and the petition is ordinarily entertained once seven months have passed since letters issued. For a lifetime trust, there are no letters and no existing file. The Surrogate’s Court has jurisdiction, generally in the county where the grantor lived or where the trust is administered, and the Supreme Court has jurisdiction as well; most beneficiaries use the Surrogate’s Court. The petition attaches the trust agreement and every amendment and identifies the beneficiaries from its terms. If you do not have the instrument, that is the first thing the petition asks for.

The citation and the order

The court issues a citation directing the trustee to show cause why they should not account, with a return date. The trustee may consent, may oppose (there are few good grounds: that the petitioner has no interest, that the account has already been settled by decree or release for the period, or that the petition is premature), or may not appear. Where the petitioner has an interest and no account has been settled, the order follows, and it directs the trustee to file an account within a fixed period, commonly a few months, and to serve it on the interested parties. See compelling an accounting under SCPA 2205 and compulsory accountings.

Step Three: Contempt and Removal

Most trustees account once ordered, because the alternatives are worse. A trustee who lets the deadline pass faces a motion to hold them in contempt of the court’s order, with fines and, in an extreme case, commitment until they comply. Failure to account when ordered is also a ground for removal under SCPA 711 and 719, and the two applications are often made together: the court removes the trustee, appoints a successor, and directs the removed trustee to turn over the assets and records and to account to the successor. A removed trustee does not escape the accounting; they now owe it to the successor, who has every reason to pursue it. The court can also deny the trustee’s commissions for the period and charge them with the cost of the proceedings their refusal caused. See removal of a fiduciary.

Reconstructing Decades of Records

The trustee who refuses to account is often the trustee who has no records, or has records that will not survive scrutiny. Neither is a defense. The trustee bears the burden of accounting for everything received; a gap in the records is charged against the trustee, not the beneficiaries.

In practice the account is rebuilt from the outside in. Bank and brokerage statements are obtained from the institutions, by the trustee or, if the trustee will not, by subpoena in the proceeding; most institutions keep records for years, and older statements can often be recovered from the trust’s fiduciary income tax returns and the accountant who prepared them. The opening values come from the executor’s account or the estate tax return for a testamentary trust, and from the funding documents and appraisals for a lifetime trust. Real estate transactions are on the public record. Distributions are confirmed with the beneficiaries who received them. From these, the schedules are assembled year by year, principal and income separately, until the reconciliation ties to the last statement. A twenty-year trust is a project, but one we do regularly; the cost is a charge to the trust unless the trustee’s default caused it, in which case the court can lay it on the trustee. A trustee who wants to know what a proper account looks like should read how a New York accounting is prepared.

Time Limits

Beneficiaries often ask whether it is too late. Usually it is not. The trustee’s duty to account is a continuing one: it runs until the account is settled by releases or by decree, and a beneficiary can compel an account for the whole period of the trust however long it has run. A trust that has gone twenty years without an accounting can be made to account for all twenty.

What can run out is the time to pursue particular claims once the beneficiary is on notice of them. Limitations periods for a beneficiary’s claims against a trustee begin when the trustee openly repudiates the trust or the beneficiary’s rights, or when an account has been rendered and settled, not while the trustee is quietly administering and the beneficiary has no reason to know of a problem. A trustee who has said in writing that they will never account, or that the beneficiary has no interest, has started a clock, and so has a trustee whose account was accepted and released years ago as to the period it covered. Delay also matters short of any statute: records are harder to obtain, witnesses are gone, and a trustee will argue that a beneficiary who knew and waited should bear the consequences. The practical rule is simple. If the trustee has refused, act on it now.

What to Expect When the Account Arrives

The account is served in the Surrogate’s Court schedule format (SCPA 2208), with a petition for its judicial settlement and a citation setting a return date. What follows is the accounting proceeding itself:

1. Review the schedules against the records. The principal received and its values; the realized gains and losses; the income collected; the expenses charged to principal and to income; the distributions of each; the investments; the commissions; and the cash reconciliation. The first questions are whether anything is missing, whether the opening values are right, and whether the reconciliation actually ties to the statements.
2. Examine the trustee under oath. SCPA 2211 permits an examination of the fiduciary and production of the books and records before objections are due. This is where the statements, closing documents, invoices and investment records that were never volunteered are obtained.
3. File objections by the return date. Objections under SCPA 2209 must be specific: which entries, on what grounds, for what relief. Typical trust objections are an investment record that fails the Prudent Investor Act (a concentrated position or years in cash), principal paid to the income beneficiary without authority, expenses that were the trustee’s own, commissions taken on the wrong base or without the annual statements SCPA 2309 requires, and misallocation between principal and income. See objecting to an accounting.
4. Discovery, settlement or hearing. The parties exchange records and take depositions. Most contested trust accountings settle at a conference before the court attorney once the records are on the table; those that do not are tried before the Surrogate, who rules on each objection and fixes any surcharge.
5. Decree. The decree settles the account for the period, directs any surcharge, fixes commissions and fees, and binds everyone who was cited. Where the trust continues, it also fixes the opening balances for the next period.

An account that was compelled is often incomplete the first time. Missing schedules, an income column that is simply the brokerage statement totals, or a cash reconciliation that does not reconcile are all grounds to ask the court to direct a supplemental or corrected account before objections are due, and the court routinely does so.

An Example

A grandmother’s will left her apartment building and her investments in trust for her son for life, remainder to his children, with the son as sole trustee. Fifteen years later the building has been sold, the grandchildren are adults, and the trustee has never sent a statement. Their letter goes unanswered. They petition the Surrogate’s Court that probated the will to compel an account; the trustee is ordered to file one within a few months and does not. On the motion for contempt and removal, the court removes him, appoints a corporate successor, and directs him to account to it. The account, reconstructed from the bank and brokerage records, the closing statement on the building and the fiduciary tax returns, shows that a portion of the sale proceeds was paid to the trustee as if it were income and that the remaining principal sat in a money-market fund for a decade. The successor and the grandchildren object; the matter settles with the trustee repaying the principal he received, his commissions for the period denied, and interest on the money improperly held.

Pitfalls

• Petitioning without a written demand first. The court can still order the account, but the demand is what makes the trustee’s conduct look like a refusal and supports charging the trustee with the cost.
• Filing in the wrong court for a lifetime trust, or without the instrument attached.
• Petitioning to compel a testamentary trustee before seven months have run from letters of trusteeship, unless there is a specific reason the court should act sooner.
• Accepting a partial account, or statements, as compliance with the order. The order calls for the schedules; insist on them.
• Missing the return date on the citation once the account is filed. The decree binds everyone cited, including a beneficiary who did not object in time.
• For trustees: waiting until the contempt motion to hire someone to prepare the account. The cost is the same either way, and the court’s view of the trustee is not.

If a trustee has refused to account, or if you are a trustee who has been served with a citation to account and needs the account prepared, we can tell you what the court will require, how long it will take, and what it will cost. Call 212-233-1233 or email [email protected].