Unless prohibited by law or under the governing instrument (a provision which itself may be prohibited by law depending on the jurisdiction), trustees should consider sending out account statements to anyone who does or who may have standing to sue you as trustee because it may start statutes of limitation running on possible claims and put the recipient on inquiry notice of potential claims. But, as the United States Court of Appeals for the Sixth Circuit recognized in Smith v. J.J.B. Hilliard (unpublished), the road runs both ways for trustees. If a trustee delegates investment authority to an investment advisor or counselor, the trustee better pay attention to the account statements being sent back to it.
In Smith, a co-trustee sued her investment counselor and broker dealer, alleging that its agent made incompetent investments ten years earlier that cost the trustsRead More