Eric Sheldon CPA, PC

Fiduciary Accounting Tips for the Layman

Fiduciary accounting is the process of recording and reporting the transactions and activities of a trust, estate, or conservatorship. This is done in the normal course of administration, but it can also be required by a court order.

Fiduciaries owe many legal duties to the beneficiaries of a trust, estate, or conservatorship. A breach of these duties can result in liability. So, it is important to understand fiduciary accounting tips.

Fiduciary Accounting Tips

Fiduciary accounting is important in helping trustees keep track of the funds in their accounts. They must be able to accurately allocate the receipts and disbursements, and they must be aware of the financial obligations of their beneficiaries.

Here are some tips.

  1. Accountings must be accurate and provide complete information. This means they should reflect the assets on hand, the beginning and ending assets, and the period of accounting.
  2. Accountings must be in a format that is easy to read and follow.
  3. Fiduciaries may hire professional accountants to do this for them. Some states, like California, require a particular format or may require the accounting to be filed in court. Depending on the state, accountings must be completed at least once per year.
  4. Accountings include all receipts and disbursements, and account for changes in the assets or significant transactions.

Fiduciary accounting helps ensure that all receipts and disbursements are properly allocated between income and principal. If the account is not complete, reconstruction may be needed to reconcile missing documentation.

Preparing trust accounting can be very complicated and overwhelming for the average trustee. Due to the complexity and serious ramifications, it is recommended that you have a qualified and experienced CPA prepare to do this.

If you need help with trust accounting, give us a call.

Additional Resources

  • What is fiduciary accounting and when would I need it?
  • Common Fiduciary Mistakes
  • How to Avoid Trust Accounting Disputes

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About the Author

Eric Sheldon

Eric Sheldon

Eric Sheldon is a certified public accountant with more than 25 years of experience in a wide variety of industries. He's the owner/operator of Eric Sheldon CPA, PC, an accounting firm that specializes in providing tax strategy and preparation, accounting, and bookkeeping services to individuals and small business owners.

More information:

How to Avoid Trust Accounting Disputes

If you are the beneficiary of a trust, you may be able to challenge the Trustee’s accounting. It can be a messy, expensive and time-consuming process. Taking advantage of an attorney’s expertise can help you to navigate these tricky waters. In the course of administering a trust, fiduciaries are held to the highest accountability standards.

Read More »

What is fiduciary accounting and when would I need it?

Fiduciary accounting (sometimes called “court accounting”) is a comprehensive report of the activity within a trust, estate, guardianship, or conservatorship during a specific period. It is a process whereby a fiduciary records the receipts, disbursements and changes in the asset value of a trust. This helps to make sure that the trust is in compliance

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Fiduciary Accounting Tips for the Layman

Fiduciary accounting is the process of recording and reporting the transactions and activities of a trust, estate, or conservatorship. This is done in the normal course of administration, but it can also be required by a court order. Fiduciaries owe many legal duties to the beneficiaries of a trust, estate, or conservatorship. A breach of

Read More »

How to Avoid Trust Accounting Disputes

If you are the beneficiary of a trust, you may be able to challenge the Trustee’s accounting. It can be a messy, expensive and time-consuming process. Taking advantage of an attorney’s expertise can help you to navigate these tricky waters. In the course of administering a trust, fiduciaries are held to the highest accountability standards.

Read More »

What is fiduciary accounting and when would I need it?

Fiduciary accounting (sometimes called “court accounting”) is a comprehensive report of the activity within a trust, estate, guardianship, or conservatorship during a specific period. It is a process whereby a fiduciary records the receipts, disbursements and changes in the asset value of a trust. This helps to make sure that the trust is in compliance

Read More »