Rhode Island Supreme Court Denies Trust Beneficiary an Accounting of Trust Assets

Rhode Island state law allows for the formation of various trusts and similar instruments in order for a person or organization (the settlor) to place their assets under the protection or control of another (a trustee) for the benefit of some person or organization (the beneficiary). Trusts are often designed to benefit one party until their death, upon which the trust assets are distributed to other beneficiaries and the trust is ultimately dissolved. The Rhode Island Supreme Court recently resolved a dispute concerning the management and distribution of a trust between a beneficiary of a trust and a trustee who had been managing the assets.

The plaintiff in the recently decided case was a beneficiary of a trust that was created by a woman who named the defendant as a trustee. Upon the death of the settlor, the defendant complied with the terms of the trust, paying out certain bequests to the beneficiaries of the trust (including the plaintiff), and then dividing the remaining assets among the other trustees as required by the trust agreement.

The plaintiff, who was also the administrator of the settlor’s estate, believed that the trust may have been mismanaged or improperly distributed, and requested a detailed accounting of the trust, as well as a detailed and onerous accounting of the defendant’s personal finances. The defendant refused the plaintiff’s request, maintaining that they had managed and distributed the trust properly and that they had no obligation to provide the plaintiff with the requested information. The plaintiff then took the defendant to court.

At the lower court level, the judge found that the trust in question was not the type of trust that would allow a beneficiary in the plaintiff’s position to demand the accounting that they had requested. As a result of the ruling, the plaintiff was unable to obtain the accoutings. The plaintiff appealed the ruling to the Rhode Island Supreme Court, arguing that the trust in question was a “custodial trust” that was bound by a statutory requirement for the beneficiaries to have access to accounting information.

Because the trust in question was not explicitly referred to as a custodial trust in its inception documents, the high court took a detailed look at how the trust was created, and compared attributes of the trust to Rhode Island’s definition of a custodial trust as defined by statute. The Court eventually found that the trust in question was not a custodial trust and that the plaintiff was not entitled to the accountings that were requested. The plaintiff’s position of administrator of the settlor’s estate did not change the court’s reasoning, as the trust in question and the will/estate were separate issues, and the trust was explicitly designed to address the assets in question.

Find the Right Trust and Estate Attorney as Soon as Possible

Disputes surrounding trusts, wills, estates, and inheritances can be some of the most complicated and adversarial conflicts in the legal system. The fact that the intention of a deceased person has been reduced to documents that are not always prepared or executed properly can make matters worse. The best time for someone to prepare for the management and disbursement of their assets upon their death is while they are well and of sound mind, so their intentions can be reasonably put down on paper. If you or a loved one is seeking advice for a Rhode Island trust or will creation, the experienced Rhode Island trust and estate attorneys at Bilodeau Capalbo can help you effectively describe your intentions into a clear and enforceable document, to prevent unnecessary conflict down the road. Contact our offices today at 401-300-4055 to schedule a free consultation and discuss your case.