I am a beneficiary of my mother’s estate which is being administered in Michigan. I would like to know if there is a law stipulating a time frame in which the personal representative, who is also the trustee must report to the other beneficiaries or heirs.
Answer: At least annually.
The laws governing the administration of trusts are codified at MCL 700.7101 to MCL 700.7511.
As a trust beneficiary and interested person, you have the power to invoke the court’s oversight. According to MCL 700.7104, you, as a trust beneficiary can provide a written demand to register the trust and if the trustee fails to do so within 28 days, they are subject to removal and denial of compensation or to surcharge as the court may direct. Furthermore, you can invoke the court’s jurisdiction under MCL 700.7201 with regard to the management and distribution of a trust estate, submission of an account or report to beneficiaries, payment of a trustee’s fees and other trust obligations, acceptance and change of trusteeship, and any other aspect of trust administration.
According to MCL 700.7205, you have the power to petition the court to review the propriety of employment of a person by a trustee including an attorney, auditor, investment advisor, or other specialized agent or assistant, and the reasonableness of the compensation of a person so employed and the reasonableness of the compensation determined by the trustee for the trustee’s own services. The court may order a person who receives excessive compensation from a trust to make an appropriate refund.
In order to invoke the court’s oversight, pursuant to MCL 700.7206, you must file a petition in the court and give notice to interested persons. The court may order notification of additional persons. A judgment or order binds each person who is given notice of the proceeding even if not all interested persons are notified.
Whether or not to assert your power depends upon an assessment of the duties and liabilities of the trustee. There is a general duty of a trustee to administer a trust expeditiously for the benefit of the beneficiaries. According to MCL 700.7302, except as otherwise provided by the terms of the trust, the trustee must act as would a prudent person in dealing with the property of another, including following the standards of the Michigan prudent investor rule. If the trustee has special skills or is named trustee on the basis of representation of special skills or expertise, the trustee is under a duty to use those skills.
As to the specific question presented, MCL 700.7303 provides for the duty to inform and account to beneficiaries. For a revocable trust, within 28 days after acceptance of trust or the death of the settlor, whichever is later, and for all other trusts, within 28 days after acceptance of the trust, the trustee shall inform in writing each interested trust beneficiary of the trust’s existence, of the court in which the trust is registered, if it is registered, of the trustee’s name and address, and of the interested trust beneficiary’s right to request and receive both a copy of the trust’s terms that describe or affect the interested trust beneficiary’s interest and relevant information about the trust property.
Furthermore, upon reasonable request, the trustee shall provide a beneficiary with a copy of the trust’s terms that describe or affect the beneficiary’s interest and with relevant information about the trust property. Also, unless the settlor directs or requests in the trust instrument that the trustee provide accounts to less than all interested trust beneficiaries, all of the following apply:
(i) At least annually and on termination of the trust or a change of the trustee, the trustee shall provide a statement of account to each current trust beneficiary and shall keep each current trust beneficiary informed of the trust and its administration.
(ii) Upon reasonable request, the trustee shall provide a statement of account to each interested trust beneficiary who is not also a current trust beneficiary and shall keep each of those persons reasonably informed of the trust and its administration.
(iii) The trustee shall provide a statement of account and other information to a beneficiary as the court directs.
(iv) In the trustee’s discretion, the trustee may provide a statement of account and other information to any beneficiary.
If the settlor requests or directs the trustee in the trust instrument to provide accounts and information to less than all interested trust beneficiaries, the trustee shall provide statements of account and information as provided in the trust instrument. At the court’s direction, the trustee shall provide statements of account and other information to persons excluded by the settlor’s request or direction to the extent and in the manner the court directs.
A statement of account under this section is a report by the trustee that shall, at a minimum, list the trust assets, if feasible giving their market values, the trust liabilities, receipts, and disbursements, and state the source and amount of the trustee’s compensation. A particular format or formality is not required for a report or statement of account under this section unless a court specifies its content and manner of presentation.
Again, the short answer is that the trustee must report to beneficiaries and interested persons at least annually. However, it is in the trustee’s interest to account whenever an inquiry is made since the beneficiaries and interested persons do have the power to invoke the court’s oversight, thereby complicating matters for the the trustee.