An Indiana Court of Appeals opinion underscores the importance of accountings in trust administration, but also raises questions about why families place siblings in adversarial positions to begin with.

According to an article posted by the Indianapolis law firm of Faebre Baker Daniels,  the original case involved three siblings, Scott, Jeff and Stacey – and arose after Scott and Jeff began to question some of Stacey’s actions as trustee of their respective trusts – specifically, her handling of the trusts’ joint ownership of multiple parcels of real property. Shortly after the siblings executed a mediated settlement agreement and partitioned the properties, Scott sued Stacey, as trustee of his trust, alleging she failed to provide an accounting and had misused trust assets. Scott also alleged misappropriation of $107,000 of trust assets, which were characterized as trust expenses – which were in fact legal fees Stacey had incurred “years before the most recent trust-related litigation,” apparently with other family members.

One of the duties of a trustee (known as fiduciary duties) is to keep trust property separate and to maintain – and make available to trust beneficiaries – adequate records, which Stacey admitted she had failed to do. Unfortunately for Scott, he did not bring his complaint until after the two-year statute of limitations had expired, and the trial court found Stacey did not commit a breach of trust as to the accountings.

Scott also demanded reimbursement for his attorney’s fees for bringing the complaint against Stacey, which after being denied by the trial court was reversed by the Indiana Court of Appeals and Stacey was ordered to pay Scott’s legal fees.

While the crux of the case deals with a trustee’s responsibility to maintain adequate records and provide them to a trust’s beneficiaries, the real story in this case is the human one – that of a family of siblings now divided – at least partly – because one was put into an adversarial position with the others. I wonder if the trustee fee savings was worth it?

Source: Indiana Court of Appeals Opinion Upholds the Importance of Accountings in Trust Administration | Publications | Insights | Faegre Baker Daniels