As you make plans for the future of your estate, you will come across new terms you are not familiar with. It’s important not to get terms confused so you can create a smoother experience for yourself. Two common terms that are often used interchangeably are court accounting and trust accounting.
While they may sound similar, they do not mean the same thing. Take a deep dive into these terms and learn what they mean below.
What is Court Accounting?
A court accounting is an accounting of income and expenses which includes beginning assets, gains and losses, and beneficiary distributions. It typically occurs when there is no will or if the deceased did not appoint an executor. It includes the activity within a trust, an estate, guardianship, or a conservatorship. A court accounting may also occur if beneficiaries disagree on the distribution of assets.
The biggest difference between this term and trust accounting is that court accounting is reviewed and approved by the court.
Related Article: What’s the Difference Between Informal and Formal Court Accountings?
What is Trust Accounting?
Trust accounting is a record of information about the income and expenses of a trust. A trust accounting includes information such as taxes paid, disbursements made to beneficiaries, expenses paid to professional advisors (CPAs, attorneys), and compensation and expenses reimbursements paid to trustees. This accounting is specific to trusts, and it typically does not go through probate, which is completed by trustees and approved by the court.
It is important to keep an accurate record as a trust accounting is usually required annually for a trust – as it is in California.
Related Article: What Are the Reasons to Require a Court Accounting?
Get Help with Court Accounting and Trust Accounting
Now that you are aware of both terms, you can be confident in planning the future of your affairs. This article is a great resource for your executors or trustees to hang onto not only for definitions, but also for assistance on both of these services. Marcia L. Campbell is a CPA based in Riverside that specializes in court accounting and trust accounting in the state of California.
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As the most experienced CPA in the Inland Empire who specializes in working with seniors, Marcia L. Campbell is committed to helping each client thrive by caring for their personal and financial wellbeing with genuine interest, well-established expertise, and a focus on respectful partnerships. Marcia’s team specializes in a number of services, including elder & financial care, court & trust accountings, as well as private fiduciary and tax services. At Marcia L. Campbell, CPA, we understand the importance of our clients’ individual needs and are committed to helping them make the best personal and financial decisions for their future.