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Trust Administration FAQs

Frequently Asked Questions

Q: What is a trust accounting?

As part of their fiduciary responsibility to the beneficiaries of a trust, trustees must disclose the financial details of their trust administration to the beneficiaries in the prescribed manner. A trust accounting consists of a list of all property received by the trust and all “disbursements” from the trust. This usually translates to a list of income and expenses. It also consists of a list of assets and liabilities of the trust at their fair market values. Trustees must disclose all trustee compensation as part of their accounting.

Accountings can be complicated if assets, income, or expenses have not been carefully recorded or documented; if assets have been lost; if expenses or debts must be allocated among competing beneficial interests; or if there is misconduct or financial losses to disclose.

Court-approved trust accountings must follow fiduciary accounting rules. Those rules require a presentation of information using the often-confusing concepts of “charges” and “credits,” and tracking of all changes in the form of assets, such as when mutual funds are redeemed for cash in the trust’s investment account.

Simple accountings can be prepared on a spreadsheet or in accounting software. More complicated accountings should be prepared by professionals.

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