When properly prepared a fiduciary accounting will provide transparency into the administration of a trust or estate, which can satisfy the beneficiary or lead to litigation.
Acting as a fiduciary isn’t easy. A fiduciary owes many duties to the beneficiaries, and a breach of a duty can result in liability. This includes the duty to account. Sometimes an accounting is required by the governing instrument or by state statute, ordered by a court or prepared in connection with litigation. Other times, an accounting might be needed because a beneficiary requests it. When properly prepared a fiduciary accounting will provide transparency into the administration of a trust or estate, which can satisfy the beneficiary or lead to litigation. From the fiduciary’s perspective an accounting starts the statute of limitation, which may protect a fiduciary by restricting the number of years a beneficiary might have to bring a lawsuit.