I really think that I have “stepped in it.” I am Trustee of my uncle’s trust. I decided to wrap it up on my own. I thought I did everything, but after I distributed funds, one beneficiary (a charity) asked for an accounting. I am feeling adrift.
– Queasy on Quindell
Dear Queasy on Quindell:
As Trustee, you are liable for all of your actions as Trustee. You could be personally liable if you are in breach of the trust or the legal requirements you are obligated to follow under California law.
One requirement is that a Trustee of an irrevocable Trust must provide an accounting of all income, liabilities and assets to the beneficiaries on an annual basis. (If, however, all beneficiaries waive this right, you will not need to provide an accounting.)
Many Trustees who I work with forget this critical duty. Trustees often get so focused on doing things QUICKLY that they forget about this step. But, nobody wins a prize for speed. Rather, accuracy and completing the steps properly is best.
Folks often assume they can distribute funds after all of the assets have been liquidated. But, the accounting should be done and given to all beneficiaries BEFORE making distributions. If you give out the funds AND THEN get asked for an accounting, may find yourself without the trust funds to create the accounting or defend your actions.
In this video I talk about “Where’s My Money? – Accounting Is Important“.