When representing fiduciaries in litigation that estate and trust beneficiaries commence, my Farrell Fritz, P.C. colleagues and I seek to limit the fiduciaries’ exposure to liability.  One way to accomplish that objective is to narrow the period for which beneficiaries have standing to compel fiduciaries to account.  In Yonke v. D’Angelo, New York County Supreme Court Justice James E. d’Auguste addressed the issue of whether a remainder beneficiary of a revocable trust has standing to compel the trustee of the trust to account for the period prior to the grantor’s death.  Based on Justice d’Auguste’s reasoning in Yonke, I now provide an update concerning that issue.

In trusts and estates litigation, “[s]tanding is a threshold constitutional issue”, as “without standing, ‘a party lacks authority to sue’” (Yonke v. D’Angelo, Index No. 150398/2015, 2024 WL 3361241, at *4-5 [Sup Ct, New York County July 10, 2024]).  “The doctrine of standing is an element of the larger question of justiciability and is designed to ensure that a party seeking relief has a sufficiently cognizable stake in the outcome so as to present a court with a dispute that is capable of judicial resolution” (id.).  Thus, the “most critical requirement of standing is the presence of injury in fact—an actual legal stake in the matter being adjudicated” (id. [quotation mark omitted]).

Bearing those principles in mind, it is worthy of note that a “revocable trust instrument . . . only becomes ‘irrevocable’ upon the grantor’s death” (id.).  “Until the grantor’s death, a revocable trust is an ‘ambulatory instrument,’ and the grantor retains the right to revoke, or amend, the instrument and/or the rights of the beneficiaries who take under it” (id.).  “The trustee of a revocable trust (if not the [grantor]) simply acts at the behest of the” grantor (id.).  “If the [grantor] becomes dissatisfied with the trustee or with the terms of the trust, he or she simply amends the trust to suit his or her desires” (id.).  “The grantor need not seek the approval of a court, or another party, in order to revoke or amend a revocable trust instrument”, and “the remainder beneficiaries of a revocable trust [generally] have no right to take action relative to the trust before the grantor dies” (id.).

Consequently, “a remainder beneficiary of a revocable trust [generally] lacks standing to compel the trustee[] of the revocable trust to account for the period before the grantor’s death” (id.).  “The underlying rationale is that, during the grantor’s lifetime, the grantor retains the right to revoke or amend the governing trust instrument, and the remainder beneficiaries’ interests in the trust, thus, vest only upon the grantor’s death” (id.). 

In Yonke, the grantor created a revocable trust in 2010 (id. at *1-5).  The revocable trust instrument provided that, upon the grantor’s death, the revocable trust’s assets would pass to a continuing trust established for the benefit of the grantor’s daughter, with the continuing trust’s assets being distributed to the grantor’s daughter when she reached certain age benchmarks (id.).  The grantor died in 2012 (id.).  Years later, the grantor’s daughter sought to compel the trustee of the trust to account, not only for the period after the grantor’s death, but also for the period from the trust’s creation until the grantor’s death (id.).  The trustee moved for dismissal of the grantor’s daughter’s petition to compel him to account, to the extent that the petition sought an accounting for the period prior to the grantor’s death (id.).

By Decision and Order on Motion, dated July 10, 2024, Justice d’Auguste granted the motion (id.).  In doing so, Justice d’Auguste wrote: “the remainder beneficiary of a revocable trust lacks the authority to sue the trustee of the revocable trust for an accounting of the trustee’s administration thereof during the lifetime of the trust’s grantor” (id.).

In granting dismissal of the petition for an accounting for the period prior to the grantor’s death, Justice d’Auguste rejected the grantor’s daughter’s argument that an exception exists to the general rule that a remainder beneficiary of a lifetime trust lacks standing to compel a trust accounting for the period before the grantor’s death (id. at *7).  The grantor’s daughter unsuccessfully claimed that “[o]ne possible exception to [the general] rule [exists] where a person with a remainder interest establishes that a trustee other than the [grantor] made an improper withdrawal from the trust without the [grantor’s] approval or ratification” (id.).  Interestingly, certain trial court authority may support the existence of such an exception in certain circumstances (Matter of Shay, 33 Misc3d 1230[A] [Sur Ct, Bronx County 2011]).

Yonke makes clear that a remainder beneficiary of a revocable trust may lack standing to compel the trustee of such a trust to account for the period prior to the grantor’s death.  To the extent that a trustee of a revocable trust is confronted with a petition to compel the trustee to account for the period prior to the grantor’s death, the trustee and the trustee’s counsel should be mindful of Yonke when considering whether to engage in motion practice intended to limit the period for which the trustee may have to account and, thus, face liability.