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It is not rare that our office is contacted by individuals looking for guidance on their rights as a beneficiary to a trust. Similarly, we often have beneficiaries requesting a variety of information from our clients who are trustees. We often advise our clients that transparency is always the best course of action. Furthermore, it is a common practice of our office to provide trust beneficiaries with detailed accountings of the trust expenditures.
Recently, consistent with our practice, the Court of Appeals granted a writ of certiorari in Johnson v. Johnson. Both the trial court and Court of Special Appeals ruled that a contingent remainder beneficiary of an inter vivos trust is entitled to an accounting of trust assets. James Johnson was a contingent remainder beneficiary. He repeatedly petitioned the trial court for accountings of the Johnson Family Trust to which he was a contingent beneficiary. The Courts erred for broad disclosure rather than restricting access to details of the trust assets. Seemingly, these rulings offered guidance as to the level of disclosure required of a trustee, and further, which beneficiaries are entitled to such information. While the lower courts began the dialogue on their way to establishing this important benchmark, the Court of Appeals simply “pleaded the fifth.” Despite granting the writ of certiorari, the Court of Appeals dismissed the case for lack of jurisdiction. They stated that because the lower court order did not determine “a question of right between the parties,” that the issue was not ripe for appeal. It was determined that a court order to provide an accounting was not a final order and therefore did not determine a question of right between the parties.
Thus, although this topic has been introduced, the true merits of this issue have not been fully examined. So, while many of us have watched this case with baited breath, we remain back at square one with all of the same questions. Absent a rigid set of rules broadening or constricting disclosure, I will continue to advise my clients that transparency remains the best option. Regardless, until the Court of Appeals has the ability to issue a formal ruling, the question of who may compel disclosure is anyone’s best guess.
- Gary Altman, Esq. and Adam Abramowitz, Esq.