Preparing an Orange County trust accounting is one of the most important obligations of a successor trustee. If this is your first time serving in the role of trustee, you may not be familiar with the rules and procedures for rendering an account. The following are three common accounting questions that arise during a trust administration.
Why do I need an accounting if the trust is a “living trust”?
A living trust is only revocable while the person who created it is still alive. During that time, the creator is also typically the trustee. By the time that you are appointed as the successor trustee and begin the administration process, the creator has most likely passed away, and the trust has now become irrevocable. The California Probate Code requires successor trustees of irrevocable trusts to prepare accountings of the income and expenses of the trust during the administration process.
What records do I need to keep in order to prepare the Orange County trust accounting?
Preparing a proper accounting under state law requires you to keep detailed records about the income and expenses of the trust. These records may include:
- Receipts from all expenditures made as part of the trust administration
- Copies of checks or other documentation for income received by the trust
- Monthly, quarterly, and annual account statements
What if the living trust states that I do not need to prepare an accounting?
Even if the trust instrument states that you do not have to prepare an accounting, you may still be required to render and distribute the accounting under the law. Since failing to uphold your obligations as a successor trustee could potentially expose you to liability, it is very important to consult with an experienced attorney before choosing not to prepare an accounting. Even if the accounting is not required under the law, there are benefits to preparing it regardless. One example is the event of a lawsuit challenging the actions of the successor trustee during trust administration.
To learn more about administering a trust and rendering an accounting, contact an experienced Orange County trust administration attorney today. Call our office at (714) 459-5481 for a consultation.