Ohio Trust Law
Trusts – that beautiful legal creation of English minds from centuries past. Everyone wants one, but no one quite knows what it is!
Legally, a trust is a legal relationship where an owner of property (grantor or settler) transfers legal title to a trustee, and the equitable title, otherwise understood as the economic benefit, is transferred to the beneficiaries. Since property is being held and administered by a trustee for the benefit of the beneficiaries of the trust, trust law requires the trustee to act in good faith, loyalty, impartially towards multiple beneficiaries, and as a prudent person to the beneficiaries of a trust.
Each of these will be discussed in upcoming blogs. For now, the discussion will be circumscribed to the concept of transparency under Ohio trust law.
Ohio law requires transparency on the part of the trustee so that the beneficiaries are able to determine if the trustee is acting in good faith and loyalty to their interests. This has been codified in the Ohio Revised Code, and Ohio Revised Code § 5808.13(C) provides that the beneficiaries can request annually a detailed accounting from the trustee regarding the property held in the trust. Specifically, the accounting must inform the beneficiaries of the following:
- A list of the property held in trust;
- The liabilities;
- The receipts of additional property;
- Disbursements of property;
- The source and amount of the trustee’s compensation.
Furthermore, Ohio common law has determined that beneficiaries have the right to inspect trust accounts and trust property. They also may direct questions to the trustee regarding the management of the trust.
So practically speaking, what does this mean for those who find themselves entangled in the world of Ohio trust law?
For trustees, it means you need to keep accurate records. Keep records of the property held in trust; be able to account for any disbursements you make; keep accurate records of bank statements as a beneficiary can request to examine bank accounts. In summation, be able to account for any action you take when handling property held in trust as you are managing the property, and the economic benefits that flow from the property, for the benefit of the beneficiaries. Breaching your required duties may result in you being liable for restoring the value of the property and trust distributions as if the breaches never occurred.
For beneficiaries, this means that if you are concerned with the management of the trust property, you have the legal right to request a detailed accounting of the trust annually. If, after reviewing the accounting, you are left with questions, seek out legal counsel to discuss your rights.
The Ohio Estate Planning lawyers of Browning & Meyer Co., LPA, can assist you with probate, estate administration and proper estate planning. Please contact us today to learn more.