Fiduciary Accounting: What You Need to Know
Acting as a fiduciary (trustee, executor, etc.) isn’t easy. A fiduciary owes many duties to the beneficiaries (or others depending on which fiduciary role) and a breach of a duty can result in liability. This includes the duty to account. Sometimes an accounting is required by the governing instrument or by state statute, ordered by a court or prepared in connection with litigation. Other times, an accounting might be needed because a beneficiary requests it. In many cases even if no one demands an accounting, some type of accounting, even an informal one, may be a prudent proactive step for the fiduciary to take. When properly prepared, a fiduciary accounting will provide transparency into the administration of a trust or estate, which can satisfy the beneficiary or others with interests in the matter, or it may lead to litigation. From the fiduciary’s perspective, an accounting starts the statute of limitation, which may protect a fiduciary by restricting the number of years a beneficiary might have to bring a lawsuit. This informative session will discuss: Fiduciary duties and responsibilities; Fiduciary accounting 101 – the “who, what, why and when” of fiduciary accountings; A deep dive into how to account and common mistakes to look for when reviewing an accounting; How to calculate fiduciary accounting income and why it is important to protect the income and principal beneficiaries; Differences between the federal tax code and the Principal and Income Act – a potential trap for the for the unwary! The key role accounting plays in fiduciary litigation; A case study of an accounting in an action brought by a son, who was a beneficiary against his mother who was the fiduciary of a family trust, for breach of the duty of loyalty and mismanagement of trust assets.
R.S. Lee, Sr Mgr, Fiduciary/Trust & Estate Acctg Ernst & Young LLP and Martin Shenkman, Esq.
*This may constitute attorney advertising.
* There are no professional advancement credits (CPE, CLE, etc.) offered for viewing this webinar, but a certificate of attendance will be provided.