The trustee is either an individual or a bank or trust company that holds legal title to the property for the benefit of the beneficiaries and acts according to the terms set forth in the trust.
The trustee will be responsible for determining:
- which bills need to be paid
- which expenses are incurred during the administration of the estate
- which should be paid
Then, they will need to pay them or inform creditors of any temporary delay. If the trustee is found improperly spending trust assets, or improperly distributing trust property, the trustee can be held personally liable for failing to protect the estate properly.
Trustee's Duty to Keep & Render Accounts
The trustee is responsible for keeping records and providing transaction details to the beneficiaries of the trust. This means that the trustee has a duty to the beneficiaries to maintain clear and accurate records of all transactions involving trust-related matters. The trustee's records must be detailed and reflect the amounts received, amounts expended, and gains and losses on trust investments. Furthermore, the accounting records should reflect allocations between income and principal so that the beneficiaries remain informed on the trust activities.
What a Failure to Keep One's Duties Means
If a trustee fails to keep proper records of transactions and account improperly, all doubts will be resolved against the trustee. When there are deficiencies in the accounting and the trustee is unable to account for missing funds, the trustee will be held personally liable for the discrepancy. In effect, the trustee may be required to reduce or return any compensation they may have received for performing their duties as a trustee, or they may be removed from the post as a trustee, or the trustee may be forced to repay the missing funds out of their own pocket. Essentially, the failure to account places the burden on the trustee to justify the difference or otherwise face liability.
The trustee has an ongoing requirement to keep proper accounting and to render accountings to the beneficiaries for the trust. While some trust documents stipulate a minimum accounting period, in the average scenario the trustee is expected to provide at least an annual accounting of all transactions.
Whether you are a trustee or a beneficiary who needs assistance with an accounting matter, we urge you to contact a Los Angeles trust litigation lawyer from the Law Offices of David A. Shapiro, P.C. for further assistance.
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