What Is Trust Accounting and What Are You Entitled to See?

Trust accounting is the process by which a trustee documents and reports all financial activity of the trust to the beneficiaries. Trustees have a legal duty to account — to keep beneficiaries reasonably informed about the trust's administration and to provide periodic statements of trust income, expenses, distributions, and asset values.

A trust accounting is one of the most important tools beneficiaries have to monitor a trustee's conduct and identify potential breaches of fiduciary duty.

What a Trust Accounting Must Include

A proper trust accounting typically contains: a statement of assets at the beginning and end of the accounting period, all income received by the trust during the period — interest, dividends, rental income, capital gains, all disbursements made from the trust — trustee fees, attorney fees, accounting fees, repairs, taxes, all distributions made to beneficiaries, any changes in the trust's investments, and a reconciliation showing how the beginning balance plus income minus disbursements equals the ending balance.

When Accountings Are Required

Trust documents typically specify when accountings must be provided — often annually and at the termination of the trust. State law also imposes minimum accounting requirements. In California, for example, trustees of irrevocable trusts must account at least annually to beneficiaries.

Even where not specifically required, beneficiaries can generally request an accounting at any time, and trustees must respond within a reasonable period.

What to Do if a Trustee Refuses to Account

Send a written demand for the accounting by certified mail. If the trustee fails to respond within a reasonable period — typically 60 days — you can petition the probate court to compel an accounting. Courts take trustee failures to account seriously and can order an accounting, surcharge the trustee for costs of the proceeding, and remove a trustee who repeatedly fails to fulfill this duty.