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Am I Entitled to a Trust Accounting?

You are entitled to an accounting…maybe…depends.  The truth is some beneficiaries are entitled to an accounting as a matter of right, while other beneficiaries may obtain an accounting at the discretion of the Court, but not as a matter of right.

Right to Reasonable Information

For starters, all beneficiaries are entitled to reasonable information from the Trustee regarding Trust business.  Under Probate Code section 16060, a Trustee has a duty to keep the beneficiaries (meaning all the beneficiaries) reasonably informed of the Trust and its administration.  This is not an accounting right, but rather a more broad mandate to provide reasonable information to all beneficiaries.  This mandate allows all beneficiaries to demand information from the Trustee.  Reasonable information may vary by Trust, but typically it would include things like copies of bank and financial account statements, real estate sales agreements and escrow closing statements, copies of the Trust documents and amendments, and anything else that would inform a beneficiary about the Trust administration.

Under 16060, the Trustee have an affirmative duty to provide reasonable information to the beneficiaries without being asked to do so.  But the beneficiaries also have the right to request reasonable information and Probate Code section 16061 requires the Trustee to respond to the beneficiary with reasonable information relating to the beneficiary’s interest in the Trust.

It’s important for all beneficiaries to understand that they have a right to reasonable information regardless of whether it is presented in the form of an accounting.  While ALL beneficiaries are entitled to reasonable information, only some beneficiaries are entitled to an accounting.

Right to an Accounting

Under Probate Code section 16062, a Trustee must account to anyone who is a current income or principal beneficiary.  When we refer to an “accounting” we mean a formal Trust accounting that follows the format set out in Probate Code section 16063 and 1060.  The proper Trust accounting format will allow each beneficiary to see the total starting assets, all income and gains received by the Trust, all expenses paid, all distributions made to Trust beneficiaries, and a listing of the ending assets on hand.  In other word, a full and complete overview of the Trust administration.

Some people are not current income or principal beneficiaries, but rather are remainder beneficiaries.  Remainder beneficiaries are not entitled to current distribution, instead their interests in the Trust will not be realized until some point in the future (such as after the death of a current Trust beneficiary).  As such, remainder beneficiaries are not entitled to a Trust accounting as a matter or right.

However, the Probate Court still has the discretion to order the Trustee to account to remainder beneficiaries.  And the court can also require a Trustee to account once the remainder beneficiaries become current beneficiaries.

 

Even if the remainder beneficiaries cannot obtain a Trust accounting, they are still entitled to information as discussed under section 1, above.  So if all else fails, just request all the same information you would want to see in an accounting, and you can pretty much accomplish the same goal.