California Trust Administration – Accounting to Beneficiaries

You’ve been chosen to serve as Trustee of a California Trust. For many, this role comes as an overwhelming surprise due to the many duties and obligations imposed upon California Trustees. One of these duties is the duty to provide a Trust Accounting.  This article provides a general overview and summary of when a Trust Accounting is due and what should be included in same.

A California Trustee’s duties begins with California Probate Code Section 16060, which states that “the trustee has a duty to keep the beneficiaries of the trust reasonably informed of the trust and its administration.” One of the methods by which a Trustee keeps a trust’s beneficiaries reasonably informed of the trust is to provide an accounting of the trust.  Providing a trust accounting is not an option, it is at least a yearly requirement mandated by California Probate Code Section 16062.  There are various events that trigger a Trustee’s duty to account, such as the termination of a trust and a change of trustee. No matter what the triggering event is, an accounting is something every California Trustee must provide to its beneficiaries.

Our firm is often asked what information must be provided in a Trust Accounting. In sum, an accounting  must contain the following information:

  • a statement of receipts and disbursements of principal and income during the last fiscal year or since the last yearly accounting;
  • a statement of assets and liabilities of the trust for the last fiscal year or sine the last yearly accounting;
  • the trustee’s compensation;
  • the agents hired by the trustee, their relationship to the trustee, and their compensation;
  • a statement that the recipient of the accounting can petition the Superior Court for a court review of the trust accounting and the trustee’s actions; and
  • a statement that claims for breach of trust can’t be made after the expiration of three years.

The basic idea is that an accounting must provide the beneficiaries with a recap of what has been going on in the trust such that the Trustee hasn’t been breaching his or her duty to act in the best interests of the beneficiaries.  The Shirvanian Law Firm has helped Trustee’s provide accountings by completing forensic accountings of complex multi million dollar trusts for its clients and assists Trustee clients keep a track of the trust’s activities on a monthly basis to avoid having to scramble to find records and/or information when a beneficiary demands an accounting in writing at the end of the fiscal year.

If you are a trustee of a California trust and have questions regarding your duties as acting Trustee, or need to provide an accounting and need an attorney to assist you, please contact The Shirvanian Law Firm at (818) 835-5396 or email us at info@shirvanianlawfirm.com.

 

 

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