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Financial, legal savvy is imperative for California trustees

Legal professionals stress choosing estate executors and trustees carefully. One of the reasons is the enormous financial responsibility that trustees carry for beneficiaries of an estate. The person assigned to a trustee position must have the competence and professional advice and resources to do the job.

Among the duties of a California estate trustee is a trust accounting, a yearly statement that is sent to beneficiaries detailing trust activities. The accounting must meet the requirements of the California Probate Code and fully explain how the trust's assets, liabilities and expenses have been handled in the previous year.

Beneficiaries receive the trust accounting along with a mandatory notice, which spells out the recipient's legal rights to dispute the trustee's work within three years. Sometimes trustees ask a court to preapprove the accounting to limit the time beneficiaries have to contest it.

Trustees are expected to retain all the supporting documents for the information provided in the accounting. Trusts may instruct trustees to add new beneficiaries to the accounting update over time or dispense completely with the accounting duty. Trustees who are absolved of providing a trust accounting often voluntarily provide it to minimize the chances of a legal claim against the management of the estate. Beneficiaries always have the opportunity to ask a court to intervene when they believe an estate is being mishandled.

Rules pertaining to trust accounting differ from similar tax or business document preparations. Trust accountings involve "balancing" estate charges and credits using unique "carry values" and separate schedules for liabilities, processes that could easily overwhelm a trustee with little financial experience.

The complexity of a trustee's duties, especially for estates of great depth and wealth, are open to constant legal scrutiny. Estate planning experts encourage individuals to take into consideration how much time, effort and expertise are needed to deal with estate management before appointing a person for the role of trustee.

Source:, "Estate Planning: Basics trustees should know about trust accountings," Dennis Fordham, Aug. 31, 2012

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