Creating a trust for your family is an act of love. Part of your preparation should include proactive monitoring to verify that your loved ones remain protected. Requiring a trustee to provide an annual trust accounting will confirm your assets are secure (or reveal potential problems) by tracking every penny that enters and leaves the account.
What trust accounting is about
Trust accounting is a formal report of everything that has happened within a trust over a specific period. Generally, an accounting includes:
- Market value of all assets at the commencement of the period
- Any money coming in
- All transactions, including changes in form of assets (sale of stocks, etc.)
- All expenses
- Distributions to the beneficiaries
- Ending balance at the end of the period
In California, the law mandates trustees to provide an account to the beneficiaries at least once a year, at the termination of the trust and upon a change of trustee.
Why the paperwork provides peace of mind
You might wonder why such granular detail is necessary. Beyond being a legal requirement, accounting protects everyone involved. It builds trust among family members by showing that the trustee is acting in everyone’s best interest. It is also a tool for transparency, preventing misunderstandings before they turn into conflicts.
Protecting what matters most
Accurate accounting offers a clear picture of whether the trustee honors your intentions and assets. This critical step can remove any doubts regarding issues that could affect your family.
Because California’s trust and probate laws are complex, consider learning more about them to gain a deeper understanding of your and your family’s rights. Seeking legal advice from an experienced attorney can help you prepare for the future.
