Numbers Game: Handling Disputes to Fiduciary Accountings.

AuthorSzczepanik, Ryan J.

a fiduciary account is a detailed report of the fiduciary's activity. The type of accounting to which CPAs are accustomed to preparing consists of an income statement, a balance sheet and a cash flow statement. A fiduciary account is fundamentally different.

California Probate Code (CPC) Sec. 16063 identifies the required contents for a trustee's account:

* A statement of receipts and disbursements that have occurred during the period;

* A statement of the assets and liabilities of the trust as of the end of the period;

* The trustee's compensation during the period;

* The agents hired by the trustee and their compensation;

* A statement that the recipient of the account may petition the court for review of the account and of the acts of the trustee; and

* A statement that claims against the trustee may not be made after the expiration of three years from the date the beneficiary receives an account or report disclosing facts giving rise to the claim.

CPC see. 1061 to 1064 identifies the requirements for an account that a trustee or personal administrator of an estate files with the court. The account's schedules must show:

* The property on hand at the beginning of the period;

* The value of any assets received during the period;

* Receipts, disbursements, net income or loss from a trade or business;

* Gains and losses on sales;

* Net loss from trade or business;

* Distributions to beneficiaries;

* Changes in the form of assets, allocation of receipts and disbursements between principal and income if the estate or trust will be distributed to an income beneficiary;

* Liabilities:

* Real property in a foreign jurisdiction; and

* Property on hand at the end of the period.

The total charges during the period must equal the total credits. The account must identify any proposed distribution.

A petition for approval of the account must accompany an account filed with the court and must:

* Describe the transactions during the period that are not readily understandable from the account;

* Explain unusual items in the account;

* State all compensation paid from the assets that are subject to the account to the fiduciary or to the fiduciary's attorneys;

* Disclose any family or affiliate relationship between the fiduciary and any agent the fiduciary hired; and

* Disclose whether the cash has been invested and maintained in interest bearing-accounts or in investments authorized by law or the governing instrument.

When Is a Fiduciary Account Due?

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