Fiduciary Accountings; Misappropriations. Stale Accountings

Beneficiaries of Wills and trusts are often shortchanged by dishonest or improperly advised executors and trustees. To understand how this can happen, it’s important to understand the relationship between (a) fiduciaries, and (b) beneficiaries.

Fiduciaries (be they executors or trustees) are the “legal owners” of a decedent’s assets. The decedent’s beneficiaries are the “beneficial owners” of the decedent’s assets. The relationship of a fiduciary-legal-owner, and a beneficiary beneficial-owner, is akin to that of a bank and a depositor.

The bank is the “legal owner” of deposited funds at the bank. The depositor of the funds is the “beneficial owner” of the deposited funds. As the legal owner, the bank can invest the deposited funds, as the bank deems appropriate. The bank can loan the funds to Smith to buy a car; to Jones to buy a house; to Green to finance Green’s business.

The bank, as the legal owner of the deposited funds, must account, and does account monthly, to the depositor beneficial owner: The monthly accounting takes the form of the monthly statement the bank gives to the depositor.

Like banks, executors and trustees — i.e. the legal owners of the decedent’s assets — must provide accounting statements to the decedent’s beneficiaries. The statements are called “fiduciary accountings”; or “estate accountings”; or “trust accountings”; or “Principal and Income Accountings”. Palm Desert fiduciary accounting lawyers Sanger & Molever are very experienced with such scenarios.

One very critical aspect of trust administrations and probates, involves fiduciary postdeath subtrust asset accountings, and principal and income accountings.

Sanger & Molever’s experience reflects that the fiduciary accounting function is very often done incorrectly by executors, trustees, and their professional advisors. Request the lawyers Sanger & Molever to explain the classic example of the Costco $100,000 rent receipt. An incorrect principal and income accounting can lead to extreme trust funding mistakes, and lawsuits.

If called to audit a faulty original funding of subtrusts, Sanger and Molever will prepare a corrected subtrust funding. More typically beneficiaries retain Sanger & Molever to correct bad accountings, or where a fiduciary has not prepared any fiduciary accountings for many years. Where no accountings have been done for years, unless a current proper fiduciary accounting is produced, it’s likely some beneficiaries will get a lot more than they should, while other beneficiaries get a lot less than they should.

Palm Desert fiduciary accounting lawyers Sanger & Molever use specialized software, and avails of the power of Excel spreadsheets (particularly Excel’s Pivot Table function), to prepare accountings where none previously existed, and to correct erroneously prepared accountings. The Palm Desert fiduciary accounting law firm has significant experience representing both fiduciaries and beneficiaries in this critical aspect of trust administration.

The experience needed to handle probates and trust administrations effectively requires skill in estate administration, estate taxes, generation skipping taxes, gift taxes, and income taxes, and fiduciary accountings. Some of these rules and laws can change “overnight.” To inquire whether you could benefit from the skill and experience to fulfill your responsibility as a fiduciary, or protect your interests as a beneficiary (i.e. did you get the correct dollar amount? Did your trust get funded properly?), you should consult with lawyers Howard Sanger or Jeff Molever.