The Trustee’s duty to account: far more than a financial statement for Beneficiaries
Abstract The duty to account is often perceived as a technical requirement, yet it holds fundamental importance. The trust assets do not belong to the Trustee: they are entrusted to them and must be managed in the Beneficiary’s interest. Accounting ensures oversight of this mandate by providing transparency, control, and protection. Today, with trusts increasingly oriented toward the well-being of Beneficiaries, accounting is no longer just a matter of numbers: it becomes dialogue, financial education, and attention to personal needs. How important is the Trustee’s duty to account? The duty to account is frequently treated as a minor obligation within the life of a trust. It often remains overshadowed by the “big” duties — loyalty, impartiality — which attract far more doctrinal and judicial attention. Yet it is precisely this understated obligation that supports the entire fiduciary structure. In recent years, a more evolved understanding has emerged: Trustees and Settlors do not simply administer assets and distribute them according to the trust instrument; increasingly, they also aim to enhance the Beneficiaries’ well-being. If this is the case, then understanding and strengthening the duty to account becomes even more essential. A trust is not a gift The fundamental reason for the duty to account is clear: the trust assets are not given to the Trustee; they are entrusted to them. The Trustee does not become their owner, nor does the Beneficiary until the moment established by the trust deed. In the meantime, those assets must be managed in the Beneficiary’s interest — and for that reason, the Trustee must account for their actions. To whom must the Trustee account? The question appears simple, but it is not. What happens if the Beneficiaries are minors? Or incapacitated? Or when the trust is a silent trust, limiting access to information? Who, then, receives the accounting? The principle remains unchanged: someone must be able to exercise oversight. The identity of this “someone” may vary (parents, guardians, Protectors, designated individuals), but the duty itself never disappears. The trust lives through transparency, even when transparency must be adapted. Traditional accounting: finance first Historically, the Trustee’s accounting has been almost entirely financial in nature. This includes sending periodic account statements, preparing — at least annually — the trust’s income statement and balance sheet, and explaining investments, expenses, gains, and management decisions. This dimension is far from secondary: a trust stands on its assets, and without proper, verifiable management of those assets, there is no interest to protect. When accounting meets the Beneficiary’s life In practice, however, numbers alone are not enough. A responsible Trustee considers the Beneficiary’s age, stage of life, predictable future needs, and personal and family circumstances. These elements naturally become part of the Trustee’s accounting — not replacing financial reporting but contextualising it. For this reason, the Trustee should also consider: -the Beneficiary’s financial education; -their understanding of the family’s wealth; -their ability to comprehend the trust’s role in their life. These activities may seem modest, yet they form a real bridge between the assets and the person. The human limits of the Trustee Trustees often see, with striking clarity, the side effects of wealth: financial dependence, identity issues, feelings of inadequacy, family conflict. Aware of these risks, they may — within the boundaries of their role — offer support, listening, and practical guidance. All without crossing the line: a Trustee is not a therapist and cannot take charge of the Beneficiary’s psychological well-being. When genuine mental health issues arise, the Trustee’s role is not to “intervene,” but to ensure that the trust’s funds are used to provide appropriate professional support. The mere fact that the Trustee administers significant wealth does not make them responsible for the Beneficiary’s happiness. A person is shaped by countless other factors: family, education, relationships, values, experiences. Over time, with knowledge and moderation, if a Trustee manages to make a positive contribution to the Beneficiary’s life, this is a merit that belongs more to care than to financial management. And it is precisely at this point that the duty to account finds its fullest expression. Conclusion To account is to respect the very essence of the trust: administering assets in someone’s interest — and proving it. It is not a formality, but an act of responsibility that protects Beneficiaries, Trustees, and the entire fiduciary structure. In a world where trusts increasingly take into account the personal development of Beneficiaries, accounting becomes a space for dialogue and transparency, where assets meet the human dimension. The Trustee must not replace the family, nor carry the full weight of the Beneficiary’s well-being, but they can and must account for their actions with clarity, humility, and consistency. This transparency is what makes a trust a safe, balanced, and genuinely useful instrument. Chiara Pascale Paolo Gaeta & Associati
