Table of Contents
What California Law Requires from Trustees
When Trustees Must Provide an Accounting
What a Proper California Trust Accounting Must Include
Types of Accounting Reports Trustees Must Prepare
Best Practices for Accurate Accounting
Common Problems That Lead to Litigation
How Beneficiaries Can Request an Accounting
How The Grossman Law Firm Can Help
Key Takeaways
- Trustees in California are required by Probate Code §16060 to keep beneficiaries informed.
- Annual accountings, change-in-trustee accountings, and final accountings are required under Probate Code §16062.
- Trustees must maintain complete records of assets, income, expenses, and distributions.
- Failing to provide a proper accounting can lead to court removal, surcharges, or personal liability.
- Beneficiaries can request an accounting at any time and can petition the court if the trustee refuses to comply.
What California Law Requires from Trustees
Trustees in California have serious fiduciary obligations, and accounting is one of the most scrutinized duties. When a trustee fails to maintain accurate records or refuses to share financial information, beneficiaries lose confidence, and disputes escalate rapidly.
At The Grossman Law Firm, we help California beneficiaries enforce their rights when trustees fail to provide proper accountings or violate their fiduciary duties. Understanding the accounting rules helps both trustees and beneficiaries take the right steps to protect the trust.
The Trustee’s Fiduciary Duty
California Probate Code requires trustees to act with loyalty, impartiality, and prudence. A major part of this fiduciary duty is financial transparency. A trustee must:
- Manage trust assets responsibly,
- Maintain complete financial records, and
- Keep beneficiaries informed about trust administration.
The Legal Standard for Communication
Under Probate Code § 16060, trustees are required to keep beneficiaries “reasonably informed” about the trust. It is not optional; it is a core fiduciary duty.
The Duty to Account
Probate Code §16062 requires trustees to provide formal accountings:
- Annually
- At the termination of the trust
- When a trustee resigns or is replaced
These rules help protect beneficiaries from mismanagement and ensure the trustee is fulfilling their obligations. If you suspect a fiduciary breach, review our resource: 20 Ways Your Trustee Can Be Breaching Their Fiduciary Duties.
When Trustees Must Provide an Accounting
A trustee is required to provide a formal accounting at specific intervals. In California, accountings are required:
Annual Accounting
Every active trust must submit a yearly report, unless the trust document explicitly waives this requirement. Even then, waivers are interpreted narrowly if beneficiary rights are at risk.
Change in Trustee
If a trustee resigns, is removed, or passes away, the outgoing trustee must prepare a full and final accounting of the trust during their period of administration.
Trust Termination
When a trust ends (typically when all assets have been distributed), the trustee must issue a final accounting that covers all remaining activities.
If a trustee fails to comply with these requirements, beneficiaries may petition the court to compel an accounting.
What a Proper California Trust Accounting Must Include
A valid trust accounting is not a spreadsheet or summary. It must follow strict Probate Code formatting.
A proper accounting includes:
Inventory and Valuation of Assets
A beginning asset schedule listing:
- Bank accounts
- Real property
- Investment accounts
- Business interests
- Personal property
Fair market value must be provided. In many cases, trustees need appraisals or valuations by financial professionals.
Income Received
Trustees must track all income, including:
- Rent
- Dividends
- Interest
- Capital gains
- Business revenue
Expenses Paid
Trustees document all expenditures, including:
- Trustee compensation
- Attorney, CPA, or professional fees
- Property taxes
- Mortgage payments
- Repairs or maintenance
- Distributions to beneficiaries
A Complete Transaction Log
Every deposit, withdrawal, expense, and transfer must be included.
Trustee Compensation
If a trustee is paid, the accounting must clearly identify:
- The amount taken
- The basis for the fee
- The period it covers
Ending Asset Schedule
The accounting must clearly show the trust’s financial position at the end of the reporting period.
Types of Accounting Reports Trustees Must Prepare
Mandatory Annual Accounting
Required by Probate Code §16062.
Change-in-Trustee Accounting
Protects both the outgoing and incoming trustee.
Final Accounting
Provided before the trustee closes the trust and distributes the remaining assets.
Informal Accounting
Sometimes, beneficiaries agree to an informal report, but many disputes arise from this point. Beneficiaries should exercise caution before waiving their formal accounting rights.
Best Practices for Accurate Accounting
Trustees can avoid disputes by:
- Keeping receipts and documents for every transaction
- Reconciling accounts monthly
- Using trust-specific accounting software
- Communicating early and often with beneficiaries
- Consulting professionals when handling complex assets
Clear financial records are the best protection against claims of mismanagement.
Common Problems That Lead to Litigation
Beneficiaries frequently call The Grossman Law Firm for help when:
- The trustee refuses to provide an accounting
- Records are incomplete or inaccurate
- Trustee compensation seems excessive
- A trustee cannot explain missing funds
- Transactions involve self-dealing
- Real property has not been valued properly
- Complex assets are mismanaged
If you suspect a fiduciary breach, review our resource: 20 Ways Your Trustee Can Be Breaching Their Fiduciary Duties
How Beneficiaries Can Request an Accounting
Beneficiaries may request a formal accounting at any time. If the trustee does not respond, they may petition the court for relief.
A trustee who ignores a request risks:
- Court-ordered accounting
- Penalties
- Reduced compensation
- Removal
- Personal financial liability
Beneficiaries do not have to tolerate silence or avoidance.
Related Resources
- Overview of California Trust Litigation
- Can the Court Remove Your Trustee for Mishandling Assets?
- Can’t Afford a Probate or Trust Attorney?
FAQ
How often must a trustee provide a trust accounting in California?
At least once a year, at the end of the trust, and when a trustee changes.
Can beneficiaries demand an accounting?
Yes. Beneficiaries have the right to information under Probate Code §16060. They can petition the court if the trustee refuses to provide it.
What happens if a trustee never accounts?
The court can impose penalties, order a surcharge, remove the trustee, or hold them personally liable.
What must be included in a trust accounting?
A beginning asset list, income, expenses, distributions, trustee fees, and an ending asset balance.
Can a trustee avoid a formal accounting?
Only if all beneficiaries agree and there is no dispute; however, this is a rare occurrence.
How The Grossman Law Firm Can Help
At The Grossman Law Firm, we help beneficiaries and heirs throughout California enforce their rights in probate and trust litigation. Our team regularly compels accounting, removes trustees who violate fiduciary duties, and recovers mismanaged trust assets.
Call (888) 443-6590 or fill out our Get Help Now form. Our Intake Specialists can evaluate your case at no cost to you. Qualifying matters will be scheduled for a Free Phone Consultation with Attorney Scott Grossman.
Originally Published September 25, 2024