Trust Litigation – Accrual of Action for Fiduciary Breach in Massachusetts
The applicable statutes of limitations are six years for breach of contract actions and three years for torts. However, a declaration of trust and schedule of beneficiaries executed under seal may be subject to the 20-year statute of limitations.
An action for breach of fiduciary duty does not accrue until the trustee repudiates the trust and the beneficiary has actual knowledge of the repudiation. Repudiation occurs when the trustee unequivocally disavows the trust obligation and announces that trust property will be held adversely to the beneficiary. A verbal repudiation must be open, definite and brought to the attention of any beneficiary who has the right to institute proceedings for fiduciary breach.
A trustee’s fraudulent concealment may toll the running of the statute of limitations. In order to prove fraudulent concealment, a beneficiary must demonstrate that the fiduciary failed to adequately disclose facts that would have given rise to knowledge of a cause of action. When a trustee makes representations that the trustee knew or should have known would induce the beneficiary to put off bringing suit and the beneficiary delays in reliance on those representations, the statute of limitations may be tolled. Typically, a beneficiary is not required to make an independent investigation of the trustee’s actions to determine when wrongdoing occurred and is not held to a reasonable diligence standard so as to invoke the discovery rule.