Fletcher v. Fletcher
1997 Va. LEXIS 16, 253 Va. 30, 480 S.E.2d 488 (1997)
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Rule of Law:
A trustee has a fiduciary duty to furnish beneficiaries, upon reasonable request, with complete and accurate information concerning the nature and amount of trust property and to permit inspection of all trust documents, even if a single trust instrument establishes multiple separate trusts for different beneficiaries.
Facts:
- J. North Fletcher and Elinor Leh Fletcher, residents of Fauquier County, accumulated substantial assets during their lifetimes.
- Following Mr. Fletcher's death in 1984, Mrs. Fletcher (Grantor) executed a revocable inter vivos 'Trust Agreement' in December 1985, placing all her assets into it and naming herself as both Grantor and Trustee.
- In August 1993, Mrs. Fletcher modified the Trust Agreement by executing an 'Trust Agreement Amendment' which replaced Article Six with a new Article Six.
- The Trust Agreement, as amended, contained specific provisions for establishing a number of trusts upon the Grantor's death, including three separate $50,000 trusts for the benefit of her adult child, James N. Fletcher, Jr., and his two children.
- The Trust Agreement appointed Henry L. Fletcher (another adult child of the Grantor) and F & M Bank-Peoples Trust and Asset Management Group as successor Trustees to act upon the Grantor's death.
- Mrs. Fletcher died in June 1994, at which point the Trust Agreement became irrevocable, and the successor Trustees assumed their duties and established the three $50,000 trusts for James N. Fletcher, Jr. and his children.
- James N. Fletcher, Jr. requested details from the Trustees of both the December 1985 trust and the trust created upon his mother's death, including a listing of assets (Schedule 'A').
- The Trustees refused to comply fully with James N. Fletcher, Jr.'s request, providing only pages 1, 8, and 9 of the 1985 instrument and 'two pages' from the Amendment, and stated that the Grantor had requested confidentiality.
Procedural Posture:
- In June 1995, James N. Fletcher, Jr. (plaintiff) instituted a chancery proceeding against Henry L. Fletcher and F & M Bank-Peoples Trust and Asset Management Group (defendants/Trustees) in the Circuit Court of Fauquier County (trial court/court of first instance).
- Plaintiff filed a bill of complaint alleging he was denied full trust information and sought a court order to compel the Trustees to provide full and complete copies of all relevant trust instruments.
- The Trustees filed a demurrer, asserting the bill of complaint failed to state a cause of action.
- The Trustees also filed an answer, denying a 'new trust' was created, asserting separate trusts were created under the existing agreement, and claiming that the plaintiff had been provided with all relevant provisions and regular accountings.
- In October 1995, pursuant to an agreed order, the Trustees filed the Trust Agreement under seal with the court for judicial examination only.
- The Circuit Court of Fauquier County heard argument on the demurrer and subsequently ruled that the plaintiff was entitled to see all provisions of the Trust Agreement.
- In January 1996, the Circuit Court of Fauquier County issued a final order compelling the Trustees to provide the plaintiff with 'full and complete copies of the Trust instruments'.
- The Trustees appealed this judgment to the Supreme Court of Virginia (highest court), with the Trustees as appellants and James N. Fletcher, Jr. as appellee.
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Issue:
Does a trustee of an inter vivos trust, which creates separate sub-trusts for different beneficiaries, have a duty to provide a beneficiary with a complete copy of the entire integrated trust agreement and all related documents upon request, even if the beneficiary's direct interest is only in a portion of the trust?
Opinions:
Majority - Justice A. Christian Compton
Yes, a trustee has a duty to provide a beneficiary with a complete copy of the entire integrated trust agreement and all related documents upon request, even if separate trusts are established under a single agreement. The Court affirmed the trial court's order, emphasizing that beneficiaries are the equitable owners of trust property and trustees are merely representatives whose function is to attend to the safety of trust property for the beneficiary. Citing established trust principles from Bogert, Restatement (Second) of Trusts § 173, and Scott, the Court held that a trustee is under a duty to provide complete and accurate information and to permit inspection of all documents relating to the trust. This duty applies even when a trust is created for several beneficiaries, each of whom is entitled to information. While trust terms may regulate the amount or frequency of information, a beneficiary is always entitled to information reasonably necessary to enforce their rights or prevent a breach of trust. The Court rejected the Trustees' argument that the creation of separate trusts under one agreement segregated their duties, viewing the instrument as a single cohesive trust based on a unitary corpus. Without access to the entire Trust Agreement, including Schedule 'A' listing assets, the beneficiary cannot intelligently scrutinize investment decisions or evaluate whether the Trustees are dealing impartially with all beneficiaries. The Court explicitly reserved judgment on the effect of a written grantor directive for secrecy, as none was established in this case.
Analysis:
This case significantly clarifies the scope of a trustee's fiduciary duty of disclosure to beneficiaries in Virginia. It establishes that the creation of multiple sub-trusts within a single, integrated trust agreement does not diminish a beneficiary's right to access the full document and all related schedules, such as asset lists. The decision underscores the principle that transparency is paramount in trust administration, allowing beneficiaries to effectively monitor trustee conduct, scrutinize investment decisions, and ensure impartial treatment. Future cases will likely rely on this precedent to compel broad disclosure from trustees, placing the burden on them to justify any withholding of information, particularly where no explicit, proven directive from the grantor to maintain secrecy exists.
