Annual Trust Accounting (Tennessee)

ANNUAL TRUST ACCOUNTING

(Trustee's Report Pursuant to Tennessee Code Annotated § 35-15-813(c))

TABLE OF CONTENTS

1. Statutory Authority and Purpose
2. Trust Identification
3. Trustee Identification
4. Accounting Period and Reporting Basis
5. Qualified Beneficiaries Served
6. Summary of Account
7. Schedule A — Statement of Assets (Carrying Value and Fair Market Value)
8. Schedule B — Statement of Liabilities
9. Schedule C — Receipts (Income and Principal)
10. Schedule D — Disbursements (Income and Principal)
11. Schedule E — Distributions to Beneficiaries
12. Schedule F — Trustee Compensation
13. Schedule G — Agent and Professional Compensation
14. Schedule H — Material Transactions and Investment Activity
15. Schedule I — Reconciliation of Beginning and Ending Balances
16. § 35-15-1005 Limitation Notice
17. Beneficiary Objection Procedure
18. Schedule J — Receipt, Release, and Ratification (Optional)
19. Trustee Verification
20. Certificate of Service

1. STATUTORY AUTHORITY AND PURPOSE

This Annual Trust Accounting is delivered pursuant to Tennessee Code Annotated § 35-15-813(c), which requires the trustee to send to the distributees or permissible distributees of trust income or principal, and to other qualified beneficiaries who request it, at least annually and at the termination of the trust, a report of the trust property, liabilities, receipts, and disbursements, including the source and amount of the trustee's compensation, a listing of the trust assets and, if feasible, their respective market values.

This Accounting is intended to constitute a "report" within the meaning of T.C.A. § 35-15-1005 sufficient to commence the running of the one-year limitation period for any claim of breach of trust as to facts adequately disclosed herein.

2. TRUST IDENTIFICATION

3. TRUSTEE IDENTIFICATION

4. ACCOUNTING PERIOD AND REPORTING BASIS

5. QUALIFIED BENEFICIARIES SERVED

This report is being served upon the following qualified beneficiaries within the meaning of T.C.A. § 35-15-103(15), and/or their representatives under § 35-15-303:

6. SUMMARY OF ACCOUNT

7. SCHEDULE A — STATEMENT OF ASSETS

7.1 Cash and Cash Equivalents

7.2 Marketable Securities

7.3 Real Property

7.4 Closely-Held Business Interests

7.5 Tangible Personal Property and Other Assets

7.6 Total Assets

8. SCHEDULE B — STATEMENT OF LIABILITIES

9. SCHEDULE C — RECEIPTS

9.1 Income Receipts

9.2 Principal Receipts

10. SCHEDULE D — DISBURSEMENTS

10.1 Income Disbursements

10.2 Principal Disbursements

11. SCHEDULE E — DISTRIBUTIONS TO BENEFICIARIES

12. SCHEDULE F — TRUSTEE COMPENSATION

13. SCHEDULE G — AGENT AND PROFESSIONAL COMPENSATION

14. SCHEDULE H — MATERIAL TRANSACTIONS AND INVESTMENT ACTIVITY

15. SCHEDULE I — RECONCILIATION OF BEGINNING AND ENDING BALANCES

16. § 35-15-1005 LIMITATION NOTICE

IMPORTANT — STATUTE OF LIMITATIONS NOTICE PURSUANT TO TENNESSEE CODE ANNOTATED § 35-15-1005

PLEASE READ CAREFULLY. THIS NOTICE AFFECTS YOUR LEGAL RIGHTS.

Under Tennessee Code Annotated § 35-15-1005(a), a beneficiary may not commence a proceeding against a trustee for breach of trust more than one (1) year after the date the beneficiary, or a representative of the beneficiary, was sent a report that adequately disclosed the facts indicating the existence of a potential claim for breach of trust.

A report "adequately discloses" facts indicating the existence of a potential claim for breach of trust if it provides sufficient information so that the beneficiary, or representative of the beneficiary, knows of the potential claim or should have inquired into its existence.

For any potential breach-of-trust claim not subject to the one-year period under § 35-15-1005(a) (for example, because the facts were not adequately disclosed), Tennessee Code Annotated § 35-15-1005(c) imposes a residual outside limitation period commencing upon 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.

By delivery of this Annual Trust Accounting, the trustee intends to commence the running of the one-year limitation period of § 35-15-1005(a) as to all facts disclosed herein. If you believe the trustee has committed any breach of trust based on the facts disclosed in this Accounting, you must commence a proceeding within ONE (1) YEAR of the date you were sent this Accounting, or your claim may be forever barred.

17. BENEFICIARY OBJECTION PROCEDURE

17.1 Informal Objection

A beneficiary who objects to any matter disclosed in this Accounting is encouraged to first deliver a written objection to the trustee at the address shown in Section 3, identifying with reasonable particularity each item objected to and the basis for the objection.

17.2 Judicial Objection

A beneficiary may file a petition for judicial review of this Accounting in the Chancery Court of [____________] County, Tennessee, which has subject-matter jurisdiction over trust matters under T.C.A. § 35-15-201 et seq. and over the construction of trust instruments. Any such petition must be filed within the applicable limitation period set forth in Section 16 above.

17.3 Tennessee Forum for Non-Resident Settlors

The Tennessee Investment Services Trust Act (T.C.A. § 35-16-101 et seq.) and other provisions of the Tennessee Trust Code permit the Tennessee Chancery Courts to exercise jurisdiction over trusts having Tennessee situs, including trusts of non-resident settlors who have selected Tennessee as the governing law and forum.

18. SCHEDULE J — RECEIPT, RELEASE, AND RATIFICATION (OPTIONAL)

I, the undersigned beneficiary of the trust identified above, hereby acknowledge:

1. That I received this Annual Trust Accounting on [__/__/____];
2. That I have examined or had the opportunity to examine the Accounting and the records on which it is based;
3. That I knew of my right to object to the Accounting and to seek judicial review;
4. That I knew the material facts disclosed in the Accounting; and
5. That my execution of this Release was not induced by any improper conduct of the trustee.

Subject to the foregoing acknowledgments, I hereby:

• ☐ APPROVE the Annual Trust Accounting for the period [__/__/____] through [__/__/____];
• ☐ RELEASE AND DISCHARGE the trustee from all liability for any act, omission, or transaction disclosed in the Accounting;
• ☐ RATIFY all acts and omissions of the trustee during the accounting period as disclosed; and
• ☐ WAIVE any right to commence a proceeding against the trustee for breach of trust based on facts disclosed in the Accounting.

This Release is given pursuant to Tenn. Code Ann. § 35-15-1009.

Beneficiary Signature: [________________________________]
Printed Name: [________________________________]
Date: [__/__/____]

STATE OF TENNESSEE
COUNTY OF [____________]

Sworn to and subscribed before me on [__/__/____] by [____________].

Notary Public: [________________________________]
My commission expires: [__/__/____]
[NOTARY SEAL]

19. TRUSTEE VERIFICATION

I, the undersigned Trustee, declare under penalty of perjury under the laws of the State of Tennessee that:

1. I am the duly acting trustee of the trust identified herein;
2. I have prepared, or caused to be prepared under my supervision, this Annual Trust Accounting;
3. To the best of my knowledge, information, and belief, the matters set forth in this Accounting are true, correct, and complete;
4. This Accounting fairly presents the assets, liabilities, receipts, disbursements, and distributions of the trust for the accounting period stated; and
5. This Accounting is intended to constitute a "report" under Tenn. Code Ann. § 35-15-813(c) sufficient to commence the limitation period under § 35-15-1005(a) as to all facts adequately disclosed.

Executed at [____________], Tennessee, on [__/__/____].

Notarial Acknowledgment

STATE OF TENNESSEE
COUNTY OF [____________]

On this [____] day of [____________], 20[____], before me, the undersigned notary public, personally appeared [____________], who proved to me on the basis of satisfactory evidence to be the person whose name is subscribed to the within instrument and acknowledged to me that he/she executed the same in his/her authorized capacity as Trustee.

Notary Public: [________________________________]
My commission expires: [__/__/____]
[NOTARY SEAL]

20. CERTIFICATE OF SERVICE

I hereby certify that on [__/__/____], I caused a true and correct copy of this Annual Trust Accounting, with all schedules, to be served upon each of the qualified beneficiaries (and/or their representatives under § 35-15-303) listed below by the method indicated:

I declare under penalty of perjury under the laws of the State of Tennessee that the foregoing is true and correct.

Executed on: [__/__/____]
Signature: [________________________________]
Printed Name: [________________________________]

SOURCES AND REFERENCES

• Tenn. Code Ann. § 35-15-813(c) (Trustee's report)
• Tenn. Code Ann. § 35-15-1005 (Limitation of action; 1-year report-based SOL)
• Tenn. Code Ann. § 35-15-1008 (Exculpation limits)
• Tenn. Code Ann. § 35-15-1009 (Consent, release, ratification)
• Tenn. Code Ann. § 35-15-105 (Mandatory rules)
• Tenn. Code Ann. § 35-15-303 (Representation)
• Tenn. Code Ann. § 35-15-201 et seq. (Judicial proceedings; Chancery Court jurisdiction)
• Tenn. Code Ann. § 35-15-708 (Trustee compensation)
• Tenn. Code Ann. § 35-15-802 (Duty of loyalty; self-dealing)
• Tenn. Code Ann. § 35-15-816 (Specific powers; including decanting)
• Tenn. Code Ann. § 35-15-818 (Trust protector)
• Tenn. Code Ann. § 35-6-101 et seq. (Tennessee Uniform Principal and Income Act)
• Tenn. Code Ann. § 35-16-101 et seq. (Tennessee Investment Services Trust Act — DAPT)
• Tennessee Bar Association, "Report for Duty: Protecting Against Fiduciary Liability"
• Smith, "Not Your Father's Trust," Tennessee Bar Journal (May/June 2023)

END OF ANNUAL TRUST ACCOUNTING