During the trust administration process, successor trustees typically must prepare regular accountings. An accounting outlines the expenditures of the trustee, the income of the trust, distribution of assets, outstanding liabilities, and assets of the trust. This information helps to ensure that the trustee carries out the administration properly. In some cases, however, the trust instrument itself may state that the trustee does not have to fulfill the obligation of completing regular accountings. Even when the trust contains such a provision, it may be in the successor trustee’s best interest to prepare the accounting regardless. The following are three reasons why:

  1. An accounting keeps the beneficiaries informed about the trust administration process. Often, disagreements during a trust administration arise due to confusion or lack of information.
  2. A beneficiary can insist upon an accounting anyway by requesting that the probate court order it. Generally, if a beneficiary wants an accounting, the successor trustee will be required to produce and prepare it.
  3. Providing regular accountings may protect you from potential liability if your actions are challenged later on, such as an allegation of co-mingling of funds, self-dealing, or misappropriation of assets.

Opting not to keep accurate records and prepare these regular accountings could be a risky decision, even if the trust instrument allows it. It is vital to consult with an experienced attorney before deciding not to prepare an accounting. Even if you choose to prepare the accounting, an experienced Orange County trust administration attorney can help you create a thorough and satisfactory account. For more information, contact our office today at (714) 459-5481.

James F. Roberts
Founder and owner of the Law Office of James F. Roberts and Associates, a premiere estate planning law firm
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