The title of trustee comes with a great deal of responsibility, and one of the most monumental tasks includes annual trust accounting. In the state of California, trustees are required to complete an accounting of the trust assets and how they’ve been used each year.
This means that the trustee is required to keep complete and accurate records in order to pay taxes and keep everyone up-to-date. This covers not only all income and expenses but also any changes or the termination of a trust.
Here’s the information you’ll need to gather in order to complete your annual trust report:
- All income received, expenses paid, and gains or losses on sale of trust assets.
- Taxes paid and disbursements made to beneficiaries.
- Fees and expenses paid to advisors of the trustee, such as attorneys, CPAs, and financial advisors.
- Compensation and expense reimbursements paid to the trustee.
The role of a trustee can be difficult in many ways. Not only is organization crucial, but a trustee needs to have the ability to act impartially on behalf of all beneficiaries despite their relationships. Because financial matters can get messy, especially within families, it’s important that the trustee keep thorough records of what they’ve done in regards to the trust each year.
Here are a few ways to maintain accurate records:
- Use a CPA or licensed fiduciary to prepare the annual accounting.
- Seek professional help for investment advice and document those decisions.
- Keep copies of bank statements and check registers.
- Keep copies of credit card statements, and receipts for large purchases.
- Have property included in the trust appraised by a professional and keep records of its value.
- Make sure to give proper notice of intention to charge trustee fees (30 days).
Remember, annual trust accountings are not only required by probate code, but can also provide protection for a trustee if a beneficiary decides to contest the trustee’s actions.
Do you have more questions about preparing a trust accounting?
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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.