When you become a trustee of a trust, you are automatically required to do a lot of things. You should keep careful track of all expenditures and be ready to produce records of what you have done. It is a good idea to hire an accountant or other professional if you find this challenging or the trust is sufficiently complex.
Once you become trustee (and you may well regret the decision to take on this often thankless job) you have a duty to render an accounting to the income beneficiary(s) of the trust. An income beneficiary of a trust is a beneficiary who the trust is set up to support and who is entitled to distributions of income for various stated reasons based upon what the trust says. Remainder beneficiaries (people who do not have a current, vested interest), on the other hand, are not entitled to an accounting of the trust, though they (and their lawyers) commonly believe this to be true.
Prob. Code, § 16062, places a duty on the trustee to provide annual accountings to income beneficiaries. The trustee does not have a statutory duty to account to remainder beneficiaries. However, a remainder beneficiary may request information from the trustee under Prob. Code, § 16061. If the trustee does not reasonably comply with the request, the remainder beneficiary may petition to the probate court under Prob. Code, § 17200, subd. (b)(7), to order the trustee to provide information or a particular account if the trustee did not do so voluntarily within 60 days after the beneficiary’s request for information under § 16061. The probate court has discretion to grant the petition and order the trustee to account to the remainder beneficiary. This interpretation of the California Probate Code harmonizes Prob. Code, §§ 16061, 16062, and 17200, subd. (b)(7), in a manner that protects a remainder beneficiary’s interests without imposing additional mandatory duties on the trustee.
If you are a trustee is good practice to keep the records clean. However, if a remainder beneficiary begins to start making trouble (as they often do) the law is clear that they are not entitled to such an accounting.
