Assembling trust administration info yearlyTrusts divide transactions between principal and income. Although you can format them in a variety of ways, this figure shows a sample account in a form commonly used by most trust accountants. Schedule A minus Schedule B must equal Schedule C, and Schedule D minus Schedule E must equal Schedule F.
If all your trust’s assets are held by one bank, brokerage, or law firm fiduciary department, they should send you annual trust accounts. If you’ve scattered the trust’s assets among a variety of financial institutions, the responsibility of compiling all the information into one account becomes yours.
Although annual account preparation may seem like a lot of work for little benefit, it’s important for a trustee to do every year. Not only do you pick up any inconsistencies in your recordkeeping this way, but you also create a permanent record of set points in the trust’s timeline.
Obtaining assents of beneficiariesOnce you’ve created an annual account, sign it and provide copies to all the beneficiaries for their assent, or approval. Prepare a summary cover sheet for the account, sign it as trustee, attach it to the six schedules, and provide a copy of the complete packet to the beneficiary. Include a photocopy of that cover sheet, which the beneficiaries then sign and return to you. Signed, these photocopies become the beneficiary’s assent to the account.
After obtaining assents from all the beneficiaries, attach these signed documents to the front of your account, and keep the whole everything together in a permanent file. This figure shows a sample cover page, with the assent line included, for the annual account shown in the previous figure.
Filing with the probate courtIf your trust is governed by an instrument contained within the Last Will of the trust’s grantor, you may file annual accounts with the probate court. In most cases, the annual account format shown in the first figure should be adequate, but obtain the court’s specific guidelines. Instead of using the cover sheet in the second figure, use the court’s cover.
Even if you don't get pressure from the probate court to file the annual account, you are still required to file. Prepare and file accounts in a timely fashion; finding all the financial records you need years after the fact can be difficult.