Upon the death of the settlor, a revocable trust typically becomes irrevocable, triggering specific duties for the successor trustee under the Ohio Trust Code (OTC). The trustee must comply with the following notice and reporting obligations to qualified beneficiaries (those currently entitled to distributions or those who would receive assets if the trust terminated). See, Ohio Revised Code (ORC) § 5801.01.
Initial Notice Requirements (Within 60 Days)
Under ORC § 5808.13(B), when a revocable trust becomes irrevocable due to the settlor’s or grantor's death, the successor trustee must notify qualified beneficiaries within 60 days after accepting a role as trustee or learning of the trust’s irrevocability. The notice must include:
- Trust’s Existence: Confirmation that the trust exists and is now irrevocable.
- Settlor’s Identity: The name of the deceased settlor(s) or grantor(s).
- Trustee’s Contact Information: The trustee’s name, address, and telephone number.
- Right to Request Trust Instrument: Notification that beneficiaries may request a copy of the trust’s terms relevant to their interests (e.g., distribution provisions).
- Right to Trustee’s Report: Inform beneficiaries of their right to receive a trustee’s report at least annually.
Delivery Method: The notice should be sent by certified mail, return receipt requested, or personally served to ensure proof of delivery. Delivery without proof won't protect a trustee from a beneficiary denying receipt.
Lost Beneficiaries: If a beneficiary cannot be located after reasonable diligence or is unknown, the trustee is not required to notify them. A trust instrument may establish a maximum period of time and the mechanisms by which a trustee is to locate a lost beneficiary. Still, these mechanisms and limitations must meet the requirements of Ohio law for due process.
Notice and Reports are not Waivable by a Trust: Trusts and wills often contain very broad language waiving all kinds of duties and relieving the trustee of responsibilities that might otherwise be required by the law. Some of these are enforceable; some are not.
Ongoing Duty to Inform and Report
Under ORC § 5808.13(A), the trustee has a continuing duty to keep qualified beneficiaries reasonably informed about trust administration and material facts necessary to protect their interests. This includes:
- Prompt Response to Requests: The trustee must respond promptly to beneficiary requests for information about trust administration (e.g., asset details, distributions, valuations, or appraisals). Ohio case law emphasizes timeliness, with delays beyond a reasonable period (e.g., months) risking liability.
- Annual Reports: Under ORC § 5808.13(C), the trustee must provide yearly reports to current beneficiaries (those eligible for income or principal) and other beneficiaries who request them. Reports must include:
- Trust property (e.g., real estate, investments).
- Liabilities, receipts, and disbursements.
- Trustee’s compensation (source and amount).
- A listing of trust assets and, if feasible, their market values.
- Trust Terms Upon Request: If a beneficiary requests a copy of the trust, the trustee may provide only relevant provisions unless the entire instrument is requested. If the trust was restated or amended, beneficiaries can obtain prior versions through a judicial proceeding.
Exceptions: The trust instrument may waive or modify reporting duties (e.g., reducing frequency), but mandatory rules under ORC § 5801.04 prevent waiving the duty to provide reports or information to qualified beneficiaries of irrevocable trusts. Trusts created before January 1, 2007, may follow prior law.
Practical Note: Annual reports and prompt response to beneficiary inquiries can prevent disputes. If inquiries are repeated or come from counsel representing a beneficiary, the trustee should also seriously consider retaining counsel.
Forms: Proactive attorneys drafting trusts provide information to clients regarding trust administration, which typically includes forms such as the "Initial Notification to Beneficiary" and an "Annual/Final Report to Beneficiary." Ask your drafting attorney, or if you reside in Ohio or Missouri, request a set of Final Instructions with Forms from our firm; they are free of charge.
Additional Notice Requirements
A trustee of an irrevocable trust is also required to make the following notifications:
- Change in Trustee Compensation: The trustee must notify qualified beneficiaries at least 30 days in advance of any change in the method or rate of compensation (ORC § 5808.13(B)(4)). Failure to notify limits fee collection.
- Creditor Notifications: Ohio’s OTC does not explicitly mandate creditor notifications for irrevocable trusts post-settlor death. Moreover, ORC § 5806.04(B) allows trustees to distribute assets without liability unless they have actual knowledge of a pending contest or receive written notification of a potential contest within 90 days. Prudent trustees may notify known creditors to limit claims, potentially shortening the statute of limitations.
- Charitable Trusts: If the trust includes a charitable component, the trustee must notify the Ohio Attorney General and file annual reports under ORC § 109.26 (Charitable Trust Act). This applies if the settlor designated charitable beneficiaries.
Recommendations for Trustees and Caregivers
Trustees must recognize that notice requirements and duties to inform beneficiaries are fundamental fiduciary obligations. Timely and transparent communication about trust activities, as mandated by state law or trust terms, fosters trust and compliance. Failure to provide the required information can lead to serious consequences, such as removal as trustee or liability for damages and attorney fees if a beneficiary successfully challenges your actions. To avoid these risks, diligently adhere to your duty to inform, seek legal guidance when needed, and maintain clear records to protect both the trust and your role in its administration.
