Many of my prior JDSUPRA postings caution that codification of the law of trusts, such as the Uniform Trust Code (UTC), are only partial codifications. See the catalogue of my prior postings below. There is much prevailing equity doctrine applicable to the trust relationship that is outside the UTC’s purview, such as unjust enrichment jurisprudence, the immunities of the BFP who purchases from a trustee, and the equity maxims that sinew the trust relationship. The UTC declines even to define what a trust is, leaving that task to general principles of equity. Thus, a legal opinion or judicial decision that is based solely on an application of the provisions of the UTC will as likely as not be riddled with doctrinal holes. On the other hand, there is also a “dark side” to acknowledging directly or indirectly via legislation the fact that a particular equitable principle is doctrinally indispensable to the institution of the trust. Consider the trustee’s long-standing affirmative duty on an ongoing basis to furnish each beneficiary (whether the beneficiary’s equitable property rights are present or future and whether they are vested or contingent) with whatever information the beneficiary must have to effectively protect and defend those rights (hereinafter “critical information.”). The beneficiary’s right to seek enforcement of the trust in the courts as against the trustee is a sine qua non of the trust relationship; accountability is a sine qua non of enforceability; and full disclosure of critical information is a sine qua non of accountability. The first, second and third Restatement of Trusts are generally in accord. They quite sensibly, however, articulate a “standard” rather than a hard and fast mandatory “rule” governing the trustee’s equitable duty to disclose critical information, leaving it to the equity courts to continue to flesh out the contours of the duty in keeping with the duty’s policy underpinnings. Now comes UTC §813 with its grab bag of rules and sub-rules governing the trustee’s duty to disclose certain information to certain beneficiaries, an assortment that distracts from but in no way negates the trustee’s overarching duty under background equitable principles to disclose critical information. Thus, in the case of a breach of trust, it has always been the case, and still is the case, that the applicable statute of limitations will not begin to run against a beneficiary until such time as the trustee has disclosed to the beneficiary all critical information. UTC §105 provides that the §813 rules and sub-rules are mandatory; they may not be altered or waived by the terms of the trust. Prof. Thomas P. Gallanis in The Dark Side of Codifying U.S. Trust Law, 49 ACTEC L. J. 283 (2024) discusses the political push-back to the UTC’s partial codification of the trustee’s duty to disclose, particularly its “mandatory” features. Suffice it to say, the fiduciary principle is no match for the trust industry when it comes to legislative advocacy. “Broadcasting the status of the duty to furnish information as a mandatory rule was the equivalent of brandishing a red cape in a bullring. Indeed it was a red cape that soon led to a white flag. Four years after the UTC was published, the Uniform Law Commission was forced to admit that Sections 105(b)(8) 1 and 105(b)(9) on the mandatory rule to furnish information ‘generated more discussion in jurisdictions considering enactment of the UTC than have any other provisions of the Code.’The Commission surrendered by placing Sections 105(b)(8) and 105(b)(9) in brackets to indicate that ‘uniformity is not expected.’” The article concludes with an admonition: “The Uniform Law Commission and other advocates for converting the decisional law of trusts into statute law should be mindful of the dangers of codification.” As to whether a statutory quiet or silent trust is a trust in name only, see §9.9.25 of Loring and Rounds: A Trustee’s Handbook (2025), which section is set forth in the appendix below.
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