Whether you are a beneficiary or a trustee of an trust, you may be wondering does a trustee have to show accounting to beneficiaries. A trustee does not have an automatic obligation to file an accounting of the trust. But once the beneficiaries request an accounting, the trustee has to provide one.
You can ask for an informal accounting first
If a beneficiary and the trustee agree to an informal accounting, it might work, as long as the beneficiary is satisfied, they have all the information. When a trustee files an informal accounting, they don’t have to file it with the court. They can just provide it to the beneficiaries. A trustee may ask a beneficiary to approve an informal accounting before the trustee makes distributions of trust funds.
If not satisfied, demand that a trustee show a formal accounting
If the beneficiary is not satisfied with an informal accounting, they can ask for a formal accounting. If the trustee fails to provide one, the beneficiaries can compel the trustee to provide one. If the trustee is ordered by the court to provide an accounting, they usually do or get removed by the court. Sometimes they provide an incomplete or fraudulent accounting. Beneficiaries can sue to challenge those accountings and get the money that the trustee may be keeping from the beneficiaries.
Requirements of a valid trust accounting
A trust accounting is a document that details every transaction that occurred in the trust and provides some summaries and explanations of the transactions. The document consists of various schedules in a court-approved format and complying with general accounting standards. At a minimum, the trust accounting includes schedules listing line by line all of the assets that are a part of the trust, all of the expenses of the trust, all income of the trust, and proposed distributions of the trust.
The accounting is a set of schedules where a trustee has to show all possible information about the trust, such as
- an itemized list of the assets that are in the trust
- the funds or property received by the trust
- the expenses of the trust
- the beneficiary distributions already disbursed and
- the beneficiary distributions yet to be disbursed
Beneficiaries and their trust attorney can review the schedules and decide that they are satisfied with the information. Or the beneficiaries can compel the trustee to show all of the documents associated with the trust as well as the trustee’s personal documents. Beneficiaries are entitled to have the trustee show documentation such as
- account statements
- closing statements
- copies of checks
- tax returns
- loan applications
To sum up, does a trustee have to show an accounting to beneficiaries? Yes, if they ask for it.
If you are looking for a New York trust attorney who has experience with trustee accountings in New York trust, we at the Law Offices of Albert Goodwin are here for you. You can call us at 1-800-600-8267 or email at firstname.lastname@example.org.