Reporting formats: UPIA, National Fiduciary Accounting Standards provide guidance.

• Author: Downs, Bill
• Position: Estate planning - Uniform Principal and Income Act

The required format for an accounting report to a court for an estate or trust is quite different from traditional financial statements. And while the reporting format is not complicated, the guidance on how to prepare these reports is pretty slim.

Secs. 1060-1064 of the California Probate Code sets out the preferred format for court accounting and provides the bare-bones of what will be expected by the courts, including one "Summary of Account" example.

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CPAs will feel right at home with some features of the Summary of Account. For example, total charges must equal total credits. But our trained brains will have trouble leaving liabilities off the summary, and instead burying that detail on a supporting schedule.

These reports must be cash basis. And if you are looking for a formula, such as assets equals liabilities plus equity, this one could be beginning assets plus receipts plus gains equals losses plus disbursements plus ending assets.

The probate court wants to see all the details, listed on supporting schedules. Details of interest and dividend income are shown in the receipts schedules. Disbursements schedules show names of payees, and date and purpose of payments. Sales of assets also are presented in detail on a schedule of gains or losses.

Those are the everyday items to deal with. It's a bit trickier to deal with such items as rental income or distributions from partnerships.

In addition to Secs. 1060-1064, you also can find the Uniform Principal and Income Act (UPIA) in Secs. 16320-16375 of the Probate Code.

The Probate Code is available at www.leginfo.ca.gov/.html/prob_table_of_contents.html.

Uniform Principal and Income Act

You will want to be familiar with the Uniform Principal and Income Act, which is approximately 16 pages of very dense prose.

If you are preparing a typical estate accounting, you may not have to refer to the UPIA. But for accountings in which principal and income are being reported, the UPIA becomes enormously important.

The UPIA is the authority for determining whether an item is income or principal, unless there are provisions in the trust or will that override.

The latest version of the UPIA includes a description of how to treat distributions from partnerships and other entities.

A distribution of cash from a partnership is usually deemed income, unless the distribution is part of a series of cash distributions that constitute a liquidation, or partial liquidation, of the...