Brief Fact Summary. Elinor J. Fletcher created several trusts for the benefit of her children. The trustees refused to let the children see all of the portions of the trust. The trustee claimed that the grantor orally instructed them to keep the terms and the dealings of the trust confidential.
Synopsis of Rule of Law. The terms of a trust may regulate the amount of information which the trustee must give and the frequency with which it must be given, but the beneficiary is always entitled to such information as its reasonably necessary to enable him to enforce his rights under the trust or to prevent or redress a breach of trust.
Points of Law - Legal Principles in this Case for Law Students.
The beneficiary is the equitable owner of trust property, in whole or in part.
Facts. Fletcher executed a revocable inter vivos Trust Agreement. The agreement contained specific provisions for the establishment of a number of trusts upon the grantor’s death, including three separate trusts for the respective benefit of certain children. The three separate trusts were to be in the amount of $50,000 each. The trustees were authorized in their discretion to expend of the benefit of James N. Fletcher, Jr., an adult child of the grantor, such amounts of the net income an principal, of the $50,000 trust as may be necessary to provide him adequate medical insurance and medical care during his lifetime, or until such time as the trust is depleted. They were also authorized to expend, in their discretion, for the benefit of Fletcher’s children such amounts of the income and principal for the benefit of Fletcher’s children. The plaintiff alleged that one of the trust instruments recites that the Grantor transferred, assigned, and set over certain cash and securitie
s which were described in a schedule entitled “A” attached to the trust agreement. The plaintiff also alleged that on his m other’s death, he was advised that the trust assets had been transferred to a new trust with the defendants as trustees. The plaintiff requested the details of both trusts from the trustees but the trustees refused to comply with his request. The plaintiff also alleged that the trustee, Henry L. Fletcher, justified his failure to disclose the requested information by stating that his mother requested that the trust terms and dealings be kept confidential, even from the beneficiaries. The trial court issued an order that the plaintiff had an absolute right to complete copies of the Trust Agreement and all amendments refereed to in the pleadings and associated documents. The court ordered the Trustees to provide the plaintiff with full and complete copes of the trust instruments that are referred to in the Bill of Complaint.
Issue. Whether the trustees had a duty to disclose the terms of the trust agreement to the beneficiaries?
Held. Yes. The trustees had a duty to disclose the terms of the trust agreement to the beneficiaries, even though the terms of the trust itself did not require such a disclosure. Without access to the agreement, the beneficiaries were not able to assure the Trustees were discharging their duty to deal impartially with all the beneficiaries in regards to the trust agreement, in regards to their duty to use reasonable care and skill to make the trust property productive, or in regard to whether the trustees’ investment decisions made with respect to the assets revealed on Schedule “A.” Though the claim that the grantor did not want the beneficiaries to see the trust agreements in full was unsubstantiated, the Grantor could not prevent the beneficiaries from having access to the trust agreements.
Discussion. Though the trustee does not have a duty in statute to turn over the trust documents, the beneficiaries did have a right to see the trust documents.