Throughout history, we have used myths to explain the unexplainable. Without the help of modern science, it would be impossible to answer questions like where humans came from, why the world is formed the way it is, or even why some regions experience droughts while others are showered with rainfall. For as long as we have existed, myths have sustained us, provided peace of mind, and served as a buffer against the unknown. But when it comes to trust accounting, there is no room for the unexplainable or unknown, and there is definitely no place for myths. Explore common trust accounting myths with an expert CPA and fiduciary:
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Anyone Can Be A Trustee, So Anyone Can Do Trust Accounting
One common misconception about trust accounting is that anyone can do it. This myth stems from the fact that a person creating a trust can designate anyone as trustee. For trustees, though, it is essential to always select someone qualified to perform an accounting.
Maybe in Greek mythology, this would be when someone miraculously rises to the occasion and taps into literal God-given supernatural abilities, but hoping for miracles is outright negligent when the margin for error is so slim and the consequences can be severe.
“Trust accounting is a complex task that demands expertise and experience in this specific field. Accurate accounting requires considerable financial competence and administrative abilities,” Marcia Campbell, a CPA and private fiduciary explained.
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You Only Have to Reconcile When There Are Transactions
Another common myth is about reconciling accounts. Keep in mind that it is still a trustee’s responsibility to reconcile accounts and prepare an accounting, regardless of whether or not there were transactions. Reconciling accounts is a vital part of your duty when conducting trust accounting. This process proves you have accurately recorded trust transactions.
Some people mistakenly believe that you only have to reconcile accounts when there have been transactions. Remember: As long as trust accounts remain open, you must reconcile them monthly, even if there were no transactions.
Reconciling and recording transactions regularly is time-consuming and financially complex and often requires the expertise of a professional CPA.
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You Don’t Have to Keep Beneficiaries Informed About Everything
Another common misconception is that you don’t have to keep beneficiaries informed about everything. But as we said, there’s no room for myths with trust accounting.
Maybe people pass along myths to each other by word-of-mouth, but financial information about a trust needs to come from a reliable source. Beneficiaries shouldn’t be guessing what assets or funds a trust holds or what trust transactions have been made.
“Beneficiaries are usually entitled to information about assets and the condition of an estate, which is why a regular and accurate trust accounting is crucial to avoid costly contests or, worse yet, legal repercussions,” Marcia elaborated.
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Trust Accounting Services in Southern California
Do you need trust accounting services? At Marcia L. Campbell CPA, we proudly lend our expertise to bust the myths surrounding trust accounting. Just as importantly, this is just scratching the surface. The myths surrounding this process could rival those that the Greeks and Romans told.
If you need help ensuring a trust accounting is accurate and complies with the probate code, we can help. Visit our contact form and fill out a form to schedule a consultation. We will turn this task from an Odyssey to a walk in the park.