April 10, 2013
Authored by: Luke Lantta
We often see trust beneficiaries sue a trustee to compel an accounting of the trust’s receipts, disbursements and assets. A court should start with the trust instrument to determine whether an accounting is required and, if so, to whom and what it should contain. That’s what an Illinois federal court did in Drewry v. Keltz.
The trust instrument there required that “[e]ach Successor Trustee shall render an account of his/her receipts and disbursements and a statement of assets to each adult vested beneficiary.” The plaintiffs were adult vested beneficiaries of the trust who had made requests for the successor trustee to provide an accounting, which the trustee did not provide. The federal court ordered the trustee to provide the plaintiffs with an accounting of his receipts and disbursements on behalf of the trust and a statement of the trust assets within 30 days of the order.
We’re interested in this opinion for two issues that weren’t central to the court’s decision.
First, the trustee didn’t argue that the plaintiffs’ interests were not “vested” under Illinois law. Thus, the court didn’t have to address vesting, but it still did. In doing so, the court reminded us of an important tenet of Illinois trust law. The plaintiffs here weren’t entitled to any trust assets until after the grantor and his partner’s deaths. Death is an event that is certain to occur. Thus, a a bequest merely postponed until after the death of a life tenant is still a vested remainder. The inclusion of the phrase “upon death” doesn’t imply the creation of a conditional interest even though the future condition of “death” must first be met before the bequest is actually made.
Second, the time period for the accounting is interesting. The grantor died on October 19, 2009. The court ordered the trustee to provide an accounting to the beneficiaries from October 19, 2009 to the present. It’s unclear from this opinion whether the court was recognizing that Illinois falls into that group of states that does not require the trustee of a revocable trust to account for the period of time preceding a grantor’s death or whether the court was simply limiting the accounting to that period of time for which the successor trustee was the trustee of the trust. Either reasoning would be significant, but the opinion leaves us to wonder.