A California trust accounting is an important form of protection that offers a window for beneficiaries into how a trustee is administering a trust in the state of California, and it offers peace of mind for trustees by minimizing disputes. However, preparing one requires considerable expertise. The margin for error is slim. An inaccurate accounting that does not comply with the California probate code can have severe consequences.
Learn what you need to know to prepare an accounting and why it is essential to work with a specialist trust accountant like Marcia L. Campbell. At Marcia L. Campbell, we have decades of experience preparing accurate trust accountings that avoid litigation and penalties and minimize the burden on the trustee.
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How Do I Prepare a California Trust Accounting?
A California trust accounting is a record of all financial transactions involving the trust that maintains transparency and serves as a crucial protection for beneficiaries.
When you prepare a trust accounting, you do not need to register or file it with any government body, but the California probate code still places significant responsibility on trustees to prepare one. Here is what you need to know to prepare one:
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When Do I Need to Prepare a California Trust Accounting?
First, let’s discuss how often you need to prepare one. Trustees are responsible for preparing a California trust accounting regardless of whether or not they have experience or training in this discipline.
Trustees must prepare one annually at a minimum (unless the trust document says otherwise.) They also must prepare one when the trust is terminated or when a new trustee has been appointed.
Beneficiaries also have a right to this information, and trustees must provide it whenever they request it. Still, in more severe situations, particularly those that involve fraud or other criminal violations, beneficiaries can petition the court for a current accounting.
“Good trust accounting requires diligently working to keep up with the trust as trustees make transactions and the trust changes. You may not have to prepare an accounting every month, but failing to document changes on a regular basis makes it difficult to remember all the details of those transactions,” explained expert trust accountant Marcia L. Campbell.
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Who Is Entitled to a California Trust Accounting?
You must provide a California trust accounting to anyone with an interest or involvement in the trust. This typically means beneficiaries and trustees are entitled to an accounting.
Still, this depends on the trust itself. To determine who is entitled to an accounting in your situation, read the document. Trust documents sometimes state that other parties are entitled to receive an accounting, too.
Ultimately, determining who is entitled to an accounting is important. Otherwise, you might fail to provide the necessary parties with an accounting, which can result in them objecting the accounting and this issue snowballing into full-blown trust litigation.
In the end, interpreting the document and understanding who is entitled to an accounting requires the guidance and expertise of a specialist trust accountant like Marcia L. Campbell.
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What Does a California Trust Accounting Need to Include?
When you are preparing a California trust accounting, it must include specific information. These requirements enable beneficiaries to receive a comprehensive overview of the financial condition of a trust and track assets.
These accountings must be prepared to adhere to the California probate code. Per California Probate Code section 16063, the accounting must include the following documents and information:
- All receipts and disbursements (i.e. payments)
- All assets and liabilities
- Any compensation the trustee receives
- All relevant bank balances
- Gains and losses
- Taxes paid
- All professionals the trustee hires (e.g. lawyers, financial advisors, etc.)
- A statement informing beneficiaries that they can request a review of the accounting by petitioning probate court within three years
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Professional California Trust Accounting Services
Preparing a California trust accounting requires experience and expertise in several areas, including understanding the ins and outs of California probate code, interpreting complex legal documents, performing extensive and complicated accounting services, and much more. This is why working with a specialist trust accountant is of the utmost importance to save yourself the time and stress of navigating this process and to avoid costly mistakes that can result in litigation, fines, and severe legal repercussions.
To ensure your trust accounting is accurate and complies with the probate code, Marcia L. Campbell is one of the top resources in California. Visit our contact page and fill out a form to schedule a consultation. Trust us to take care of your trust.