Trustee disclosure is required by Arizona law. But how much disclosure?

Arizona’s Trust Code sets some minimum requirements. The trustee of an irrevocable trust must let the “qualified” beneficiaries know that there is a trust, and how to reach the trustee. On request, the trustee must provide at least some financial information.

But that’s the minimum. In most (but not all) circumstances, we recommend that trustee disclosure include much more information. Bank and brokerage statements, time records and copies of trust documents themselves are all possible items of disclosure. Should they all be shared freely?

As we discuss in this week’s podcast episode, trustee disclosure is often a fraught topic. If the trustee is a family member, there will be family dynamics to consider. Failure to provide complete information might lead to suspicion and anxiety. Beneficiaries might be surprised to learn about past trustee decisions — like when and how to sell assets, or billing for time and expenses, or division of personal effects.

On the other hand, there may be good reasons for withholding full information. For one thing, the settlor of the trust might have explicitly requested limited disclosure. Or beneficiaries might be poorly served by having too much detail. And beneficiaries who receive a single (often small) dollar amount don’t really need to get all the same disclosure that more substantial beneficiaries are entitled to receive.

How much trustee disclosure is required? How much is advisable? As in so many legal arenas, the answer is a clear “it depends.”