Background
James R. Hamilton created a revocable trust that was to receive his estate and, upon his death, distribute its assets in three equal shares to his son John R. Hamilton, his daughter Susan G. Kornides, and his grandchildren. Kornides served as co-trustee, held her father’s power of attorney, and was a joint owner of certain bank accounts. After their father died in 2021, Hamilton learned that Kornides had transferred the money remaining in the joint accounts to herself.
Hamilton sued Kornides in several capacities, alleging that she improperly took possession of $676,462.29 in trust funds. His claims included breach of the trustee’s duty to inform and report, breach of fiduciary duty, breach of trust, and undue influence. At trial, he introduced three reports Kornides had provided between 2022 and 2024. The reports identified assets and expenses only in generic categories and listed two large disbursements without further detail. After Hamilton presented his evidence, the circuit court granted Kornides’s motion to strike all remaining claims, concluding in part that she had satisfied her statutory reporting duty.
The Court’s Holding
The Court of Appeals reversed, holding that Kornides’s reports did not comply with Virginia Code § 64.2-775. Although the statute does not require a particular format or a formal accounting, it requires a trustee to disclose enough material information about the trust’s administration for beneficiaries to protect their interests. That obligation includes identifying trust assets, explaining how trust funds were spent, and disclosing the source and amount of the trustee’s compensation.
The court concluded that Kornides’s generic descriptions and unexplained disbursements were insufficient as a matter of law. It remanded with instructions to require a report containing the material facts reasonably necessary for Hamilton and the other beneficiaries to enforce their rights. The court did not decide Hamilton’s other substantive claims or his challenge to the denial of a continuance. After Kornides provides an adequate report, Hamilton may amend his complaint and proceed, including to a retrial if appropriate. The court also denied Kornides’s request for appellate costs and attorney fees.
Key Takeaways
- A Virginia trustee’s report need not follow a particular format, but it must provide meaningful information rather than generic asset and expense labels.
- The report must disclose material facts reasonably necessary for beneficiaries to protect and enforce their interests, including information about trust assets, disbursements, and trustee compensation.
- When inadequate reporting may have prevented a beneficiary from proving related claims, the trial court may require a proper report and permit the beneficiary to amend the complaint and pursue further proceedings.
Why It Matters
The decision clarifies the substantive minimum for trustee reporting under Virginia Code § 64.2-775. Informality is permitted, but transparency is mandatory: trustees who choose abbreviated reports bear the risk that a court will find the information inadequate.
The ruling also recognizes that beneficiaries may need disclosure before they can investigate or prove broader claims involving trust assets. A deficient report therefore can justify renewed litigation after the trustee supplies the required information.