Thursday, December 6, 2007
Professor Thomas P. Gallanis posted an abstract of his North Carolina Law Review article on the duties of a trustee to inform the trusts' beneficiaries about the trust and its administration on SSRN's Nonprofit and Philanthropy Law Abstracting Journal. The article is entitled "The Trustee's Duty to Inform" Here is the abstract:
This Article examines an aspect of trust fiduciary law historically ignored in the law reviews: the trustee's duty to provide information to the trust's beneficiaries about the trust and its administration. The time is ripe for analysis, because the scope of the duty to inform provoked contentious debate during the drafting of the recently promulgated Uniform Trust Code (UTC), and all twenty of the enacting jurisdictions, including North Carolina, have substantially modified the UTC's provisions. Part I lays the descriptive foundation, explaining the requirements of the duty to inform under the UTC, under North Carolina's version of the UTC, and in the other nineteen enacting jurisdictions. Part II contains the normative analysis, addressing the central questions about the duty to inform: should trust law contain a duty to inform and, if so, should the duty be mandatory or should it be a mere default? To answer the first question, the Article draws on two interdisciplinary perspectives: legal history and law-and-economics. These perspectives reveal that the duty to inform has a distinguished pedigree within the history of Anglo-American law reaching back nearly two centuries, and that the duty performs a vital function today. Establishing the duty's normative basis, the Article then considers whether the duty should be mandatory at least in part, as in the UTC, or wholly default law, as in North Carolina. To answer this question, the Article enters into and extends the ongoing debate over whether trusts are primarily contracts or property arrangements. Rejecting the strong contractarian approach as inconsistent with the direction of the modern law of fiduciary administration and drawing attention to the beneficiaries' unique position and incentives to supervise and enforce the trustee's fiduciary obligations, the Article concludes that the beneficiaries must have the information needed to exercise their supervisory and enforcement powers, irrespective of the wishes of the settlor. The duty to inform can be default law at the margins but must maintain a mandatory core.