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Trust Disclosure Document

How much information does a trustee need to disclose to each beneficiary and how much time does a trustee need to spend attending to beneficiary inquiries?


In a typical disclosure document, the trustee might disclose a $5 million account at the ABC Brokerage Company as of a particular date, enclosing a monthly statement . $3000 is distributed to the trustee each month in the form of trustee compensation for ordinary services . $5,000 was paid to trust counsel in the last month. A piece of real property located at 123 Main St., Any-town, USA was distributed to beneficiary John Smith pursuant to Article V of the trust document. $10,000 cash per month has been distributed to the surviving spouse . $30,000 was used to pay the annual premium for a life insurance policy owned by the trust . Any potential or pending litigation.

Increasingly, trustees are sending a cover letter to beneficiaries and highlighting important or major transactions or occurrences during a particular period of time, and otherwise explaining entries on an accompanying statement, which might not at first glance be completely understood or clear. Following this cover letter, trustees are attaching monthly statements for the financial account where trust assets may be held. In this sense, beneficiaries are receiving informal accountings on a monthly basis. Other relevant information may be disclosed or even attached, such as a real estate tax bill, a listing agreement or purchase and sale agreement, a lease, a schedule of rental payments received.

A trustee must be responsive in a reasonable and timely manner. This means that you do not necessarily need to return a beneficiary’s phone call that day or within 24 hours but you do need to return the call.

You need to answer questions which the beneficiaries may have and provide them with complete and satisfactory answers, although trustees are not necessarily expected to spend an entire day on the phone with the beneficiary.

You will no doubt encounter beneficiaries who devote an undue amount of time and effort to monitoring your actions and that of the trust. It’s almost as if they make it a part-time job. My experience suggests that those types of beneficiaries are often unemployed, or underemployed.

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