A Warm Welcome to the Uniform Trust Code—Great News for Trust Beneficiaries!
In July, Governor Patrick signed into law the Uniform Trust Code (“UTC”), and thus has expanded the rights of beneficiaries under trusts. In my view, the law liberalizes rules in two areas in which previously trust beneficiaries previously had a difficult time asserting their rights:
1. The grounds upon which trustees can be removed has been substantially expanded. A trustee may now be removed for any of the following reasons: (a) serious breach of trust, (b) lack of cooperation among co-trustees that substantially impairs trust administration, (c) where, because of unfitness or persistent failure to administer the trust effectively, removal is in the trustees’ best interests, or (d) where there is a substantial change of circumstances or removal is requested by all “qualified beneficiaries” and removal is in the best interests of the beneficiaries and is not inconsistent with a material purpose of the trust.
Prior to the enactment of the law, judges lacked sufficient guidance as to the circumstances justifying removal of a trustee. Now they have a road map, and the result is that beneficiaries who may have been reluctant to file petitions for removal will feel less shackled by the applicable law and will in fact bring such a petition.
2. The duty to keep beneficiaries informed of trust activity. Under prior law, beneficiaries had to rely on the terms of the trust to enforce any right to be informed about the trust, its activities and fiscal condition. The UTC changes that landscape considerably, and much in favor of trust beneficiaries. Trustees are now required to keep beneficiaries “reasonably informed of trust administration”. Within 30 days of accepting appointment, the trustee must informed trust beneficiaries in writing of the trustee’s name and address, and must also now send statements of account (formal or informal) annually to current beneficiaries.
All in all, the law is terrific news for trust beneficiaries. If you believe that your rights as a trust beneficiary under this new law are being violated, please feel free to contact me.