Opinion ID: 1892003
Heading Depth: 1
Heading Rank: 4

Heading: the trust accounting

Text: The Court of Chancery further held that the Trustees breached the Trust because they failed to provide the Remaindermen with the statutory accountings of the Trust, in violation of Court of Chancery Rule 114. [32] That rule requires, unless the will otherwise provides, that Trustees submit bi-annual accountings of their administration of a trust created by a will to the Court of Chancery, showing all receipts, disbursements and investments made on behalf of the trust. The Trustees contend that the Court of Chancery incorrectly found a violation of the accounting duty because after the death of Mr. Law they provided all relevant information to the Remaindermen upon their request. The Trustees further claim that because Mr. Law received 100% of the income produced from the Trust's corpus and they did not deduct any fees or expenses from the Trust, no need existed for them to file bi-annual accountings with the Court of Chancery. The Trustees also contend that their failure to file accountings with the Court of Chancery is harmless error because they eventually provided the Remaindermen with a breakdown of the Trust's assets. The Court of Chancery held that the Trustees failure constituted a breach of trust because they made no effort to comply with the rule until after the death of Mr. Law. [33] We agree and find that the failure was not harmless error because if the accountings had been timely filed, as required by the rule, the Remaindermen could have sought to have had the Trustees change their investment strategy and this lawsuit might have been avoided. We therefore affirm the Court of Chancery's holding that the Trustees violated Court of Chancery Rule 114. [34]