Annual Trust Accounting

ANNUAL TRUST ACCOUNTING

(Texas Trust Code — Tex. Prop. Code Section 113.152)

I. TRUST AND TRUSTEE IDENTIFICATION

II. MODE OF ACCOUNTING

This accounting is rendered (check one):

☐ In response to written demand delivered by beneficiary [________________________________] on [__/__/____], pursuant to Tex. Prop. Code Section 113.151(a). The 90-day statutory response window expires on [__/__/____].

☐ Voluntarily by the trustee as a matter of prudent administration, notwithstanding the absence of a demand under Section 113.151.

☐ Pursuant to court order entered in Cause No. [____________] in [____________] Court of [____________] County, Texas, on [__/__/____].

☐ Pursuant to the trust instrument at Section [____] thereof.

III. RECIPIENTS

This accounting is being delivered to the following beneficiaries entitled to receive it:

IV. STATEMENT OF ASSETS — BEGINNING OF PERIOD

(All trust property on hand at the start of the accounting period; reconciled to custodian statements as of [__/__/____].)

V. SCHEDULE OF RECEIPTS

A. Income Receipts

B. Principal Receipts

TOTAL RECEIPTS: $[________]

VI. SCHEDULE OF DISBURSEMENTS

A. Income Disbursements

B. Principal Disbursements

TOTAL DISBURSEMENTS: $[________]

VII. TRUSTEE COMPENSATION AND RELATED-PARTY TRANSACTIONS

A. Trustee Compensation

B. Related-Party / Conflict-of-Interest Transactions

The trustee discloses the following transactions involving the trustee, the trustee's affiliates, family members, or other related parties (or affirms there were none):

☐ None during the accounting period.

☐ Disclosed below:

VIII. STATEMENT OF ASSETS AND LIABILITIES — END OF PERIOD

A. Assets on Hand

B. Liabilities

NET TRUST ASSETS — END OF PERIOD: $[________]

IX. RECONCILIATION

X. STATUTORY DEMAND-RESPONSE FRAMEWORK AND BENEFICIARY OBJECTION RIGHTS

1. Section 113.151 Demand Mechanic. Under Tex. Prop. Code Section 113.151(a), a beneficiary may by written demand request a written statement of accounts. The trustee must deliver the statement within ninety (90) days of receiving the demand unless a court orders a longer period. The trustee is not required to account more frequently than once every 12 months absent court order.

2. Section 113.152 Content. A written statement of accounts under the Texas Trust Code must show: (i) all trust property that has come to the trustee's knowledge or into the trustee's possession; (ii) a complete account of receipts, disbursements, and other transactions, including their source and nature, with receipts of income and principal accounted for separately; (iii) a listing of all property on hand, describing it in such manner as is reasonable to permit identification; (iv) the cash balance on hand and the name and location of the depository where the balance is kept; and (v) all known liabilities owed by the trust. Tex. Prop. Code Section 113.152.

3. Right to Object. A beneficiary who disputes any item in this accounting may serve a written objection on the trustee identifying with specificity the item challenged and the basis for objection. Resolution may be sought through:

• informal negotiation with the trustee;
• mediation, if available under the trust instrument;
• a petition filed in the district court or statutory probate court under Tex. Prop. Code Section 115.001 (which has jurisdiction over all proceedings concerning trusts); and/or
• a suit to compel further accounting under Section 113.151 and/or to remove the trustee under Section 113.082.

4. Statute of Limitations. Claims for breach of trust are generally subject to the four-year residual limitations period under Tex. Civ. Prac. & Rem. Code Section 16.004, subject to the discovery rule and fraudulent-concealment tolling. Failure to object to this accounting does not by itself bar later claims, but full and adequate disclosure may commence the limitations period as to disclosed transactions.

5. No Exculpation Beyond Section 114.007. Nothing in this accounting purports to exculpate the trustee for breach committed in bad faith, intentionally, or with reckless indifference to a beneficiary's interest, or for any profit derived from such breach. Tex. Prop. Code Section 114.007.

XI. TRUSTEE VERIFICATION

I, the undersigned Trustee, do hereby verify under penalty of perjury under the laws of the State of Texas that:

1. I have prepared this Annual Trust Accounting based on the books and records of the Trust, custodian and bank statements, and other documents within my knowledge or possession;

2. To the best of my knowledge and belief, the information set forth herein is true, correct, and complete as of the dates indicated;

3. All material transactions, including any related-party transactions, are disclosed herein; and

4. This accounting is rendered in good faith and in compliance with the duties of a trustee under the Texas Trust Code and Texas common law.

Executed this [____] day of [______________], 20[____], at [____________], Texas.

_______________________________________
[________________________________], Trustee

_______________________________________
[________________________________], Co-Trustee (if any)

State of Texas Acknowledgment

Before me, the undersigned authority, on this day personally appeared [________________________________], known to me (or proved to me through [____________________]) to be the person whose name is subscribed to the foregoing instrument, and acknowledged to me that he/she executed the same in the capacity therein stated and for the purposes therein expressed.

Given under my hand and seal of office this [____] day of [______________], 20[____].

_______________________________________
Notary Public, State of Texas

My commission expires: [__/__/____]

XII. PROOF OF SERVICE

The undersigned certifies that on [__/__/____] a true and correct copy of this Annual Trust Accounting was served upon each beneficiary identified in Section III by the method indicated:

_______________________________________
[________________________________], Trustee / Agent for Trustee

EXHIBITS

☐ Exhibit A — Custodian / brokerage statements for the accounting period

☐ Exhibit B — Bank statements and reconciliations

☐ Exhibit C — Tax returns (federal Form 1041 and any state filings)

☐ Exhibit D — Appraisals or valuations of illiquid assets

☐ Exhibit E — Documentation of related-party transactions

☐ Exhibit F — Copy of the underlying Section 113.151 demand (if applicable)

SOURCES AND REFERENCES

• Tex. Prop. Code Sections 111.0035, 113.051, 113.053, 113.082, 113.151, 113.152, 114.001, 114.007, 115.001
• Tex. Prop. Code Chapter 116 (Texas Uniform Principal and Income Act)
• Tex. Civ. Prac. & Rem. Code Section 16.004 (four-year residual limitations)
• Streber v. Hunter, 221 F.3d 701 (5th Cir. 2000)
• Beaty v. Bales, 677 S.W.2d 750 (Tex. App.—San Antonio 1984, writ ref'd n.r.e.)
• Act of June 15, 2007, 80th Leg., R.S., ch. 451 (repealing former Section 113.060 while preserving common-law informational duty)
• Frank N. Ikard, Jr., Trustee's Duties to Disclose Information to Beneficiaries, State Bar of Texas Advanced Estate Planning and Probate Course (2008)

END OF ANNUAL TRUST ACCOUNTING