Statute Of Limitations For Breach Of Trust Suits Against Trustees

A couple of the most frequent questions in estate, trust, and probate litigation are:

(from trust beneficiaries)  "How long do I have to sue a trustee for breach of trust?", and

(from trustees or potential trustees)  "How long must I be concerned about potentially being sued for an alleged breach of trust?"

The Arkansas Trust Code (at Ark. Code Ann. Sec. 28-73-1005) addresses this issue and generally provides for two possible limitations of action:  (1) a shorter period when the trustee discloses the existence of a claim; and (2) a longer period if the trustee does not make a disclosure.

Basically, if the trustee discloses sufficient information to put the beneficiary on notice that they may have a potential claim, the beneficiary has one year after the date of the disclosure in which to bring suit.  Absent such a disclosure, the beneficiary has five years after the first to occur of: 

(1) the removal, resignation, or death of the trustee;

(2) the termination of the beneficiary's interest; or

(3) the termination of the trust

 in which to commence a claim against the trustee for the breach.

One question that does not appear answered by this statute (or any cases which so far have interpreted the statute) is whether the statute of limitation for breach of trust can be "tolled," or suspended, in situations where the trustee has engaged in fraudulent concealment.  If there has been concealment, Arkansas courts have generally held in other contexts that the statute of limitations does not begin to run until the person having the cause of action discovers the fraud or should have discovered it by the exercise of reasonable diligence. 

Eventually the Arkansas Court of Appeals or Arkansas Supreme Court will, once and for all, specifically decide whether or not the doctrine of fraudulent concealment also applies to the statute of limitations set forth in the Arkansas Trust Code.   Perhaps in doing so they can shed light on what statute of limitations, if any, applies to breaches of trust that are not governed by the Arkansas Trust Code (which only came into effect on September 1, 2005).