Trust Accounting: A Requirement of California Trustees – McNamara Law Firm

In California, Trustees have an important legal obligation when managing a Trust, called a Trustee Accounting. This is a report that must be given to the Trust beneficiaries, which details all financial activities related to the Trust. It is a complete record of investments, distributions, gains, losses, fees paid, and other activities. It gives the Trust beneficiaries a clear picture of how the Trust’s assets have been handled and whether the Trustee has done their job properly. It also shows what was “on hand” when the Trust administration began (usually upon the death of a parent/trust owner), and what is remaining for inheritance purposes after all expenses are paid.
The Trust Accounting should be prepared carefully, and in California, be prepared and provided to the beneficiaries on an annual basis, as well as at the conclusion of the Trust Administration process. It can be tricky to prepare if there are numerous accounts and transactions, as the Trust Accounting must “balance”, similar to a checking account reconciliation.
Beneficiaries can accept or reject the Trust Accounting. If a beneficiary feels the Trustee is hiding money, or did not properly administer the Trust, a beneficiary can challenge the Trustee’s actions in Court. If the Court finds that the Trustee did not act properly, the Trustee can be removed, ordered to pay damages and fines, pay legal fees, and more. In extreme cases, a Trustee may even face criminal charges and prosecution.
Handling a parent’s Trust after their passing can be complicated. It is crucial for Trustees to understand and fulfill their legal obligations when serving in this important role.
For more information or assistance with your role as Trustee, please contact the McNamara Law Firm at (661) 287-3260, or visit www.theMcNamaraLawFirm.com.