Annual Trust Accounting (North Carolina)

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3. CRITICAL JURISDICTIONAL NOTE — N.C.G.S. § 36C-10-1005 differs from standard UTC § 1005:
- North Carolina did NOT adopt the standard UTC § 1005(a) "one-year statute of limitations triggered by a limitation notice / adequate disclosure" provision.
- N.C.G.S. § 36C-10-1005(a) imposes a FIVE-YEAR REPOSE running from the first to occur of (i) trustee's removal, resignation, or death; (ii) termination of the beneficiary's interest; or (iii) termination of the trust.
- Other applicable limitations are governed by Chapter 1 (general statutes of limitations), with § 36C-10-1005(b) providing that limitations run simultaneously against represented persons (Article 3) and that G.S. § 1-17 does not toll the limitation as to those persons.
4. Practitioners commonly use this informal accounting together with a Receipt, Release, Refunding, and Indemnification Agreement under N.C.G.S. § 36C-10-1009 to obtain beneficiary consent/release/ratification with respect to disclosed matters. § 36C-10-1009 is the operative protection in North Carolina in lieu of the UTC's one-year limitation notice.
5. N.C.G.S. § 36C-10-1008 limits the validity of exculpation clauses (no relief for breach in bad faith or with reckless indifference; no validity where inserted as a result of trustee's abuse of fiduciary or confidential relationship with settlor).
6. This template provides an informal, non-judicial accounting. For judicial accountings or contested matters, use a separate filed petition under Article 2 of Chapter 36C.
JURISDICTION: North Carolina
LAST UPDATED: 2026-05-16
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ANNUAL TRUSTEE'S ACCOUNTING AND REPORT TO QUALIFIED BENEFICIARIES

(Pursuant to N.C.G.S. § 36C-8-813)

STATE OF NORTH CAROLINA
COUNTY OF [________________________________]

I. TRUST AND ACCOUNTING PERIOD

II. PARTIES

A. Trustee(s)

B. Qualified Beneficiaries (N.C.G.S. § 36C-1-103(15); § 36C-1-110)

III. STATUTORY BASIS AND CONTENT OF REPORT

This Accounting is delivered pursuant to N.C.G.S. § 36C-8-813(b)(2), which provides that a trustee is considered to have discharged the duty under § 36C-8-813(a)(1) as to a qualified beneficiary "for matters disclosed by a report sent at least annually and at termination of the trust to the beneficiary that describes the trust property, liabilities, receipts, and disbursements, including the source and amount of the trustee's compensation, and lists the trust assets and their respective market values, including estimated values of assets with uncertain values."

The schedules below describe:

1. Trust assets at carrying value and fair market value (Schedule A);
2. Trust liabilities (Schedule B);
3. Receipts (Schedule C — split principal/income per N.C.G.S. Ch. 37A);
4. Disbursements (Schedule D — split principal/income per Ch. 37A);
5. Distributions to beneficiaries (Schedule E);
6. Trustee compensation — source and amount (Schedule F);
7. Agent compensation (Schedule G — N.C.G.S. § 36C-8-807); and
8. Reconciliation of beginning and ending balances (Schedule H).

IV. ACCOUNTING SCHEDULES

Schedule A — Trust Assets (Beginning and Ending of Period)

Schedule B — Trust Liabilities

Schedule C — Receipts

Schedule D — Disbursements (Other Than Distributions to Beneficiaries)

Schedule E — Distributions to Beneficiaries

Schedule F — Trustee Compensation (N.C.G.S. § 36C-8-708; § 36C-8-813(b)(2))

Schedule G — Agent Compensation (N.C.G.S. § 36C-8-807)

Schedule H — Reconciliation

V. NORTH CAROLINA LIMITATIONS NOTICE

The Beneficiaries are advised of the following limitations governing claims against the Trustee under North Carolina law:

A. Five-Year Repose — N.C.G.S. § 36C-10-1005(a)

No proceeding against a trustee for breach of trust may be commenced more than five (5) years after the first to occur of: (i) the removal, resignation, or death of the trustee; (ii) the termination of the beneficiary's interest in the trust; or (iii) the termination of the trust.

B. General Limitations — N.C.G.S. § 36C-10-1005(b)

Except as provided in subsection (a), Chapter 1 of the North Carolina General Statutes governs the limitations of actions on judicial proceedings involving trusts. Under § 36C-10-1005(b)(1), when any limitation begins to run as to a person, it also begins to run as to all other persons that person would be entitled to represent under Article 3 of Chapter 36C, whether or not the person consented to serve as representative. Under § 36C-10-1005(b)(2), G.S. § 1-17 does NOT apply to toll the running of the limitation as to those represented persons.

C. Effect of Adequate Disclosure and Release

Under N.C.G.S. § 36C-10-1009, the Trustee is not liable to a Beneficiary for breach of trust if the Beneficiary consented to the conduct, released the Trustee from liability, or ratified the transaction, UNLESS (1) the consent, release, or ratification was induced by improper conduct of the Trustee, or (2) at the time of the consent, release, or ratification, the Beneficiary did not have knowledge of the Beneficiary's rights or of the material facts relating to the breach. No consideration is required for validity.

Accordingly, the Receipt, Release, Refunding, and Indemnification Agreement at Exhibit 1, if executed by a Beneficiary (or by a representative authorized under § 36C-3-303), operates as a consent, release, and ratification under § 36C-10-1009 as to matters fully and fairly disclosed in this Accounting.

D. Exculpation Limits — N.C.G.S. § 36C-10-1008

A term of the trust relieving a trustee of liability for breach of trust is unenforceable to the extent it (1) relieves the trustee of liability for breach committed in bad faith or with reckless indifference to the purposes of the trust or the interests of the beneficiaries, or (2) was inserted as a result of an abuse by the trustee of a fiduciary or confidential relationship with the settlor. § 36C-10-1008 limits the effect of any exculpation language in the trust instrument.

E. Mandatory Duties Not Affected

Nothing in this Accounting, the limitations notice above, or any Receipt and Release attached hereto purports to waive or limit any mandatory provision under N.C.G.S. § 36C-1-105(b), including the Trustee's duty of good faith and the court's authority in the interests of justice.

VI. BENEFICIARY OBJECTION PROCEDURE

A Beneficiary who objects to any matter disclosed in this Accounting must deliver a written objection to the Trustee at the address in Section II.A within [60 / 90 / 120] days of the date this Accounting is delivered. The written objection should:

1. Identify the specific schedule, entry, or matter to which the Beneficiary objects;
2. State the factual and/or legal basis for the objection; and
3. Specify the relief or correction requested.

If no timely written objection is received, the Trustee may reasonably rely on the absence of objection in proceeding with administration; this reliance does not, however, supplant the statutory limitations regime under N.C.G.S. § 36C-10-1005.

VII. TRUSTEE VERIFICATION

I, the undersigned Trustee, verify under penalty of perjury under the laws of the State of North Carolina:

1. I am the duly appointed and acting Trustee of the Trust identified in Section I;
2. I have prepared this Accounting from the books, records, and accounts maintained for the Trust;
3. To the best of my knowledge and belief, this Accounting is true, complete, and correct in all material respects and fairly presents the receipts, disbursements, distributions, assets, liabilities, and trustee and agent compensation of the Trust for the accounting period stated;
4. Estimated values for assets with uncertain values reflect my good-faith estimate based on the methodology disclosed in Schedule A; and
5. I have administered the Trust during the accounting period in accordance with my duties under N.C.G.S. Chapter 36C, including the duties of loyalty (§ 36C-8-802), impartiality (§ 36C-8-803), prudent administration (§ 36C-8-804), and good faith (§ 36C-1-105(b)(2)).

Acknowledgment

STATE OF NORTH CAROLINA
COUNTY OF [________________________________]

I, [NOTARY NAME], a Notary Public of the County and State aforesaid, certify that [TRUSTEE NAME] personally appeared before me this day and acknowledged the due execution of the foregoing Accounting in the capacity of Trustee.

Witness my hand and official seal, this the [____] day of [__________], [______].

____________________________________
Notary Public

My Commission Expires: [__/__/____]

[NOTARY SEAL]

EXHIBIT 1 — RECEIPT, RELEASE, REFUNDING, AND INDEMNIFICATION AGREEMENT

(Pursuant to N.C.G.S. § 36C-10-1009)

The undersigned Qualified Beneficiary, having received and reviewed the foregoing Annual Trustee's Accounting and Report for the accounting period [__/__/____] through [__/__/____] (the "Accounting"), and having had a reasonable opportunity to inspect underlying records and to consult independent counsel, ACKNOWLEDGES, AGREES, AND CERTIFIES as follows:

A. Receipt

The Beneficiary has received the Accounting, together with all schedules and any underlying documentation reasonably requested.

B. Knowledge

The Beneficiary has knowledge of the Beneficiary's rights under N.C.G.S. Chapter 36C and of the material facts relating to the administration of the Trust as disclosed in the Accounting. The Beneficiary has not been induced to execute this Agreement by any improper conduct of the Trustee.

C. Approval

The Beneficiary approves the acts of the Trustee as disclosed in the Accounting, including all receipts, disbursements, distributions, valuations, trustee compensation, and agent compensation set forth in Schedules A through H.

D. Release and Ratification (§ 36C-10-1009)

The Beneficiary, for the Beneficiary and the Beneficiary's heirs, successors, assigns, and represented persons (under N.C.G.S. § 36C-3-303), hereby:

1. Consents to all acts of the Trustee disclosed in the Accounting;
2. Releases the Trustee from any and all liability for breach of trust as to all matters disclosed in the Accounting, except as otherwise provided in § 36C-10-1009(a)(1)–(2); and
3. Ratifies all transactions of the Trustee disclosed in the Accounting.

E. Refunding (if applicable)

If, after the date of this Agreement, any tax, liability, claim, or expense is properly chargeable to the Trust and the Trustee has insufficient remaining assets to satisfy the same, the Beneficiary agrees to refund pro rata to the Trustee, on demand, that portion of any distribution received by the Beneficiary necessary to satisfy such tax, liability, claim, or expense, to the extent permitted by law.

F. Indemnification

The Beneficiary agrees to indemnify and hold harmless the Trustee from any claim brought by, through, or under the Beneficiary asserting liability for matters disclosed in the Accounting and released hereunder, except to the extent such claim arises from conduct described in § 36C-10-1009(a)(1)–(2) or constitutes a breach committed in bad faith or with reckless indifference under § 36C-10-1008.

G. No Waiver of Mandatory Duties

Nothing in this Agreement waives any mandatory provision under N.C.G.S. § 36C-1-105(b).

Acknowledgment

STATE OF [________________________________]
COUNTY OF [________________________________]

I, [NOTARY NAME], a Notary Public of the County and State aforesaid, certify that [BENEFICIARY NAME] personally appeared before me this day and acknowledged the due execution of the foregoing Receipt, Release, Refunding, and Indemnification Agreement.

Witness my hand and official seal, this the [____] day of [__________], [______].

____________________________________
Notary Public

My Commission Expires: [__/__/____]

[NOTARY SEAL]

SOURCES AND REFERENCES

• N.C.G.S. § 36C-8-813 (Duty to inform and report): https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_36C/GS_36C-8-813.html
• N.C.G.S. § 36C-10-1005 (Limitation of action against trustee): https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_36C/GS_36C-10-1005.html
• N.C.G.S. § 36C-10-1008 (Exculpation): https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_36C/GS_36C-10-1008.html
• N.C.G.S. § 36C-10-1009 (Beneficiary's consent, release, or ratification): https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/BySection/Chapter_36C/GS_36C-10-1009.html
• N.C.G.S. Chapter 37A (NC Uniform Principal and Income Act): https://www.ncleg.gov/EnactedLegislation/Statutes/HTML/ByChapter/Chapter_37A.html
• Wilson v. Wilson, 203 N.C. App. 45, 690 S.E.2d 710 (2010).