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hey Paul here and in this video we're going to discuss a trustees duty to account to the beneficiaries of a trust I'm Paul Rabelais I'm a state planning attorney and you know beneficiaries of a trust they often want to make sure that the trustee is acting appropriately so how do they do that well maybe the best way to explain it is to give you an example kind of a broad example let's say dad is 60 years old with three kids he has an estate worth let's say two million dollars dad is now married to let's call her new wife who's not the mother of his three children and dad sets up his revocable living trust and of course he's the trustee and he does whatever he wants to do with it while he's alive but dad wants to keep his new wife and kids from having to go through probate together when he dies so he sets up his revocable trust to avoid all the probate and then dad's revocable trust says that when Dad dies dad's revocable trust becomes irrevocable at the moment that dad dies and in dad's revocable trust he named new wife as the successor trustee to be in charge of the trust after dad dies and it's customary for dad to name new wife as the income beneficiary of that trust customary for dad to name his three children as the principal beneficiaries of that trust and it's also customary for dad to say that the trustee after dad dies the trustee has the discretion to use principle for the income beneficiaries health education maintenance and support alright so that's a mouthful you may need to go back and rewind it and to get all the facts and get it all straight but all those scenarios are fairly common so what what are the trustees accounting obligations and requirements alright so let's take let's look at the situation while dad is alive dad has a revocable trust that says when he dies new wife is the trustee and the income beneficiary and kids are the principal beneficiaries well under our Louisiana trust code which is where I'm a lawyer and where you know I practice as an estate planning attorney and you'll have to check with your own you know state trust law but our our trust code in the trustee accounting provision says if the trust is revocable the trustee has a duty to account to the set lor only so what that means is and dad is the set lor of his revocable trust so the only person that dad's needs to account to is since is himself the reason that provision is there is if for example dad set up a revocable trust and did something that was not customary he named someone else as the trustee of his revocable trust then that's someone else who was the trustee would be accountable to dad so that's the deal with the accounting provisions while dad's Trust is revocable now when dad dies and the trust becomes irrevocable and new wife is the trustee completely different set of rules here and I'm gonna read there's there's three sentences I picked out that I think are most relevant here as we talk about a trustees duty to account so the first thing I'm gonna say is a trustee is under a duty to a beneficiary to keep and render clear and accurate accounts of the administration of the of the trust so you know after dad dies new wife has to keep keeping render clear and accurate accounts of the administration of the trust so dad had two million dollars let's assume some of that after dad dies as investments maybe some of its some property or real estate so new wife there has to keep and render clear and accurate accounts okay now we get into really what new wife's Duty is cuz you know what the kids are thinking dad's kids are thinking wow we don't really get to get these assets till new wife dies new wife is in control of all of the money she gets all of the income that the trust assets produce and she can use the principle for her health education maintenance and support we ain't gonna get nothing when new wife dies because she's gonna abuse her power and she's gonna drain the trust that's what that's what the three kids are thinking so they're like what can we do to hold new wife's feet to the fire now that dad has died and she's in control of this trust so that's where these trustee accounting provisions become relevant and so another provision in our trust code says a trustee shall render to a beneficiary or his legal representative at least once a year a clear and accurate account covering his administration for the preceding year I'm going to read one more sentence and then we'll talk about it each annual account shall show in detail all receipts and disbursements of cash and all receipts and deliveries of other trust property during the year and shall set forth a list of all items of trust property at the end of the year okay so now those kids every year can say hey new wife I know you're the trustee of dads trust we're the principal beneficiaries you got to show us every year show us you know what income the trust generated show us any receipts that the trust took in any disbursements that you made out of the trust if you made some disbursements out of that trust for your health education maintenance or support we want to see what those are and we want to know why you did it and and also we want to see a detailed listing of all of the trust assets as of the end of the year so the kids have the right to ask for that because that's what's required under our trust accounting provisions on you know trust be trusty being held accountable to the beneficiaries or for for those income and expense and Trust property items so you know whether the new wife delivers the accounting is another thing whether the kids sign off on it if she does deliver it it's another thing new wife is probably not going to be sophisticated enough to provide the accounting under the accounting rules so new wife is probably gonna have to engage the services of some accountant or some third party to help her you know supply the necessary accounting items so that's where it's you know kind of shaky sometimes when a you know surviving spouse who may not be real sophisticated in business and accounting has these accounting obligations to the principle beneficiaries of the trust and so all that's going to probably cause some animosity between dads three children and the three children's stepmother who was dad's new wife okay so all that is just a piece of what should show you that the designation of a trustee of a trust is really important this one probably turned into a mess and sour relationships and and so if it did what perhaps could dad have done differently to avoid that well it's it's tough you know maybe dad could have named one of his children as the trustee maybe dad could have named co-trustees maybe new wife and one of his children as co-trustees maybe dad could have named a corporate trustee with two million dollars in dad's estate to go you know in Dad's trust to go for the benefit of new wife and kids after Dad dies that's probably enough to justify the fees that a corporate trustee would charge to serve as trustee so those are some options another thing dad could have done was watch this video and punch the like button and then also subscribe and hit the vacation Bell so that he would find out even more estate planning information so that he could make good decisions for himself and his family in the future so probably you could learn from that as well and also punch the like button in the subscribe button in the notification bell so that the YouTube algorithms will put my videos in front of you more often alright so that's the deal there the the trusty accounting the designation of trustee often these decisions are made very very quickly and they have consequences be aware of them make informed decisions we'll see you next time