When someone else handles a loved one’s trust, it can be difficult to know whether everything is proceeding as intended. You may receive updates, but still feel unsure about whether the trustee is managing things properly. A trust accounting can help you understand what is happening with the assets your loved one left behind.
What a trust accounting tells beneficiaries
A trust accounting is a financial report that shows what money came in, what the trustee paid out and what property remains. In California, trustees generally must provide these reports to beneficiaries who can receive money or property now, not only at some future date. The trust document may also matter because some trusts waive formal accounting requirements. Still, a court can require one if there is reason to believe the trustee seriously mishandled the trust.
What beneficiaries should be able to review
The report should show what happened during the months or year it covers. Under California Probate Code Section 16063, it should typically include:
- Money received by the trust, such as rent, interest, dividends or sale proceeds
- Payments made from the trust, such as taxes, insurance, repairs, debts or distributions
- Trust property and debts at the end of the reporting period
- Trustee fees or payments received from the trust
- Professionals the trustee hired, such as accountants, attorneys, real estate agents or property managers, and what they were paid
The document should also explain that you may ask the court to review the trustee’s decisions. It must also warn you that you may lose the chance to bring certain claims after three years if the report clearly gives enough facts about the problem.
Resolve questions before deadlines or distributions move forward
A trust accounting may shape whether you ask for more information, object to an expense or agree that the trustee can continue with distributions. Before signing paperwork that confirms receipt, approves the accounting or gives up certain objections, make sure you understand the report and put any unanswered questions in writing. Taking that step can help you respond with more confidence before deadlines pass or trust property is distributed.