Agreement of majority of beneficiaries does not have effect as a judicially-approved accounting

A trust agreement provided that approval of the trustee’s accounting by a majority of the income beneficiaries would “have the same effect” as if a court having jurisdiction over the trust had approved the accounting.

The court in Vena v. Vena, 899 N.E.2d 522 (Ill. App. Ct. 2008), held that this provision is unenforceable because it is not an effective mechanism for enforcing a trustee’s fiduciary duties.

First, the responsibility is too diffuse. Second, the provision gives the trustee too much control over the process, for example, by presenting the accounting only to a group of beneficiaries a majority of whom the trustee considers most likely to approve the accounting.

For a more detailed discussion of this case, see Helen Gunnarsson, Beneficiaries can’t be given power to approve trustee accounts, 97 Ill. B.J. 171 (2009).