As a beneficiary, it is not necessary to be an accountant to understand when something just is not right. In order to properly administer a trust, the trustee does not need to be an accountant either. However, proper accounting procedures need to be used in order to be sure that the trust assets are protected. The fact is that poor accounting can lead to trust litigation in a California civil court.
It is necessary to keep track of the trust’s assets, liabilities and expenses, along with any revenues of the trust. As a beneficiary, you have the right to know how the trust performs in each of these areas. In order for the trustee to accurately keep up with the trust’s operations, he or she needs to employ generally accepted government auditing standards and generally accepted accounting principles.
This means preparing financial statements for you and others to review. The trustee should be able to provide you with a balance sheet, a cash flow statement and a profit and loss statement. The trustee should also provide you access to a trust beneficiary equity statement. These documents are designed to give you a snapshot of how the trust is doing during a particular time.
If the trustee fails to provide you these documents upon request, there could be an issue. If you do receive these documents, and they do not make sense, you may begin to wonder whether the trust is being properly managed. You may ask the trustee questions, and if the answers are not satisfactory, you may need to take legal action. A California trust litigation attorney could review the documentation you have and help you determine the appropriate course of action.
Source: bizfluent.com, “Trust Accounting Procedures”, Marquis Codjia, Accessed on Jan. 22, 2018