If you're the personal representative of an estate in California, you likely already know that, as the estate's trustee, a number of duties and responsibilities fall squarely on your shoulders. That means that it's in your best interest to stay in compliance with all legal requirements imposed on you. In particular, California Probate Code places a legal duty on trustees to provide an accounting to trust beneficiaries.
Probate Accounting in California
Probate accounting, also known as trust accounting, is simply an accounting of the transactions undertaken by an estate during a specific reporting period. Section 16062 of the California Probate Code requires trustees to provide an accounting at least once a year.
An accounting is also required when the trust is terminated, such as when the trustee wishes to close the estate and bring a petition for final distribution of the estate's assets to its beneficiaries, as well as whenever there's been a change in trustee.
California Probate Accounting Format
While a probate accounting in California does not require the preparation of any specific forms or the use of any particular format, there are a number of pieces of information you need to include in your accounts. Section 16063 of the Probate Code requires accountings to contain the following information:
- a statement of receipts and disbursements of trust principal and income occurring either during the last complete fiscal year of the trust or since the last accounting was made
- a statement of assets and liabilities of the trust at the end of the trust's last complete fiscal year or at the end of the reporting period covered by the account
- information regarding the trustee's compensation
- information about any agents hired by the trustee
- a statement that beneficiaries may petition the court to obtain a review of the account and the acts of the trustee
- a statement that all claims for breach of trust are subject to a three-year limitation period
Waiver of Probate Accounting
There are, however, exceptions to the rule that an accounting is required. The need to submit a probate accounting can be waived if either of the following conditions are met:
- All persons entitled to a distribution from the estate have executed and filed a written waiver of account or a written acknowledgment that their interest in the estate has been satisfied.
- The interest of every person entitled to distribution from the estate has been satisfied in full.
Final Accounting Objections in California Probate Court
Beneficiaries have up to three years to file an objection or a challenge to a trustee's accounting. If an objection is filed, you as the trustee need to prove that the information you've provided in your accounting is accurate. As you might imagine, this can be a burdensome undertaking.
In many probate cases, beneficiaries don't file an objection, but disputes over final accounting can and do happen. Because the limitation period provides beneficiaries with three years to file an objection, one approach a trustee can take to obtain certainty about the finality of their accounting is to file a petition for court approval of the accounting under section 1064.
Once the court's approval is obtained, a beneficiary is no longer able to file an objection to the accounting or to make a claim challenging the trustee's actions. In other words, when a court grants a petition for approval of the final accounting, the trustee no longer faces potential liability for either mistakes made in the accounting or for their own actions as trustee of the estate. This is why, although filing such a petition requires extra work on the trustee's part, it is a step many trustees choose to take.
While probate accounting in California does require a certain amount of work and due diligence on the part of an estate trustee, submitting an accounting is something every trustee is required to do at least annually, and most certainly upon final distribution of the estate, unless proper waivers of the accounting can be obtained. If you need help with your probate accounting, consider using an online probate specialist to facilitate the process.