Trust accounting is a detailed record that includes information about all income and expenses related to a trust. It includes items like taxes paid, disbursements, gains and losses, and expenses paid to advisors who helped manage the trust over time.
Once the trustor has passed, the trustee will begin the termination process, which includes a final court accounting. A trustee is required by probate law to prepare a final accounting unless the beneficiaries decide to waive it in a signed document.
If all the beneficiaries are in agreement, the trustee will not be required to provide the final formal accounting. These documents are usually waived in an effort to save time and money by eliminating the costs of what can be a complicated process. But it’s important for beneficiaries to think about their individual situation and decide if a final court accounting waiver is right for them.
A full and detailed accounting will show if a trustee has properly managed assets and funds and has completed their fiduciary duties. In some cases, cutting corners may lead to issues or disagreements that could ultimately end in a withdrawal of the final accounting waiver.
The waiver may be withdrawn by either the beneficiaries or a court. In this case, the court can require a full accounting if they have evidence that a breach of trust duties likely occurred. A full and detailed accounting is one way for both the trustee and the beneficiaries to protect themselves.
If the beneficiaries decide to proceed with the final court accounting, there are a number of items that will be calculated. The process usually begins with a valuation of the assets beginning on the date of trustor’s death and ending with the value of the assets before they get distributed. The goal of the final accounting is to show everything that went in and out of the trust over its lifespan.
There is no set timeframe in which a final accounting is completed. Remember, every situation is different and the length depends on how long the trust has been in existence. If you have a more complicated trust, you can expect to wait a longer amount of time.
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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.