Trust Accountings

There was a common law duty to report trust activities to the beneficiaries. Since the beneficiaries hold beneficial interest to the property held in trust, they must be apprised of the trustee's actions to permit them to protect their interests. There was no common law duty to report to the courts.

There is no uniformity as to the proper form for an accounting. Most statutes describe the reporting requirements in general terms without specifying either the account's form or the scope of its contents. As a result, trust accountings differ significantly even within the same jurisdiction.

The Committee on National Fiduciary Accounting Standards was established in 1972 to study the fiduciary's general accounting obligations, to establish fiduciary accounting standards, and to make more uniform the principles applied in fiduciary accountings prepared for submission primarily to the courts. The Committee consisted of representatives from the American Bar Association, the American Institute of Certified Public Accountants, the National Center for State Courts, the National College of Probate Judges, the Uniform Probate Code Project, the American Bankers Association, and the American College of Probate Counsel.

In establishing the national standards, the Committee determined that an accounting's objective should be to provide essential and useful information in a meaningful format. Although the account should be complete, it should not be so massive that interested parties would not read it, and should be sufficiently simple to enable the fiduciary to prepare it without unreasonable expense to the trust. For trust accountings, it is imperative that the trustee maintain accurate records of both income and principal and correctly classify receipts and disbursements.

GEMAcct has been designed to comply with the National Fiduciary Accounting Standards. Although some jurisdictions require specific accounting techniques or formats, the reports established in the National Fiduciary Accounting Standards are either the prescribed or an acceptable format in most jurisdictions.