St Pete attorneys, Weidner Law, often work with clients who need help with trust accounting. Today we’re going to take a look at what “trust accounting” actually is and how St. Pete attorneys like Weidner Law can help you with your trust accounting concerns.
What is “Trust Accounting”?
Before we get started on how St Pete attorneys can help with trust accounting, it’s important to know what “trust accounting” actually means.
We have covered the topic of trusts before, but for a quick recap – a trust is a way of transferring assets to a “trustee” to manage for the beneficiaries named in that trust. Trusts can be set up to take effect during the life of or after the death of the individual writing the trust.
So, what is trust accounting?
Trust accounting refers to the separating of the expenses of a trust so that expenses are categorized correctly for both accounting and tax purposes. Failure to correctly classify expenses of a trust can result in a real headache for everyone involved so it’s always better to turn to one of the best St. Pete attorneys for help.
Why Trust Accounting is Important
Trust accounting is important because it ensures that all expenses associated with a trust are properly documented. It is also important to document all expenses associated with managing a trust, but this information should not be confused with the expenses of the trust.
Confused?
Let’s look at an example…
Jane’s father put a beach cottage into a trust for her. This cottage has been and will continue to be used as a rental property. Rent that is paid on the property is considered income. In order to offset this income, however, it’s important to keep track of any expenses associated with upkeeping the rental property. This is considered an expense of the trust.
Now, Jane’s uncle Frank is the trustee or the person in charge of managing the trust for Jane (who is the beneficiary). It is Frank’s job to manage Jane’s trust for her. Frank is inexperienced with trusts and hires St Pete attorneys, Weidner Law, to help him. The cost associated with hiring Weidner Law is considered an expense of managing the trust.
Why Do You Need to Keep Such Immaculate Records?
So, why is it so crucial to keep immaculate trust accounting records? A trustee is charged with numerous duties associated with their role as a trustee. Part of those duties means managing a trust prudently and in good faith and accurate accounting records for the trust. These records are not only used to determine any tax ramifications, but they can also be used to determine whether a trustee is abusing their responsibility as a trustee and is profiting from the trust themselves which is expressly forbidden. (As an aside, trustees are allowed to be compensated for their duties as a trustee but this compensation must be fair.)
Let’s look at a few examples of why immaculate trust accounting is so important…
Jane has been renting out the property that was put into the trust. Last year, a tree fell on the roof of the cottage and Jane had to replace the roof entirely. Although her insurance covered most of the expense, she was left paying the deductible on her insurance policy. This unexpected expense set Jane back financially, but with proper trust accounting, at the end of the year, the deductible that Jane paid was used to offset the income that she had from the rental property. Without proper accounting records, it would not have been possible for Jane to prove that a) she paid the deductible to have the roof replaced, b) what that deductible was, c) verification of that expense to properly deduct it from income on her annual taxes.
In a second scenario, Jane suspects that her uncle Frank who is the trustee of her trust has been taking advantage of his position by filing for inflated compensation and notating incorrect and unjustifiable expenses for trust management. Although Jane suspects this to be the case, without proper accurate trust accounting, she cannot prove that he uncle has been acting unscrupulously.
How St Pete Attorneys Can Help with Trust Accounting
Now that we know why trust accounting is important, how can St Pete attorneys, Weidner Law, help with your trust accounting needs? Two of the most common reasons that Weidner Law is called on to assist with trusts are 1) when the trust is associated with a settlement payment and 2) when the attorney is acting as a fiduciary agent on behalf of the client or their estate. Here at Weidner Law, we can perform both of those services for you and your loved ones and ensure that your trust accounting records are as detailed and organized as possible. With our experience in trust management, we can help you to avoid any unnecessary unpleasantries associated with financial questions associated with your trust and you can be confident that your trust accounting needs are being taken care of while being compliant with all necessary laws and regulations.
Why St Pete Attorneys?
Why choose St Pete attorneys to help with your trust accounting? Almost all attorneys have, at some point, been charged with assisting with trusts for their clients and most often than not this is due to trust and experience. By the very nature of the attorney-client relationship, there is inherently a lot of trust in an attorney, this trust is equally necessary when seeking someone to assist with trust accounting. In addition, attorneys have a wealth of experience in such matters which can be exceptionally beneficial for the more complicated trust scenarios.
Can St Pete Attorneys Help With Your Trust Concerns?
If you’re looking for St Pete attorneys who can assist you with any concerns you might have over trust accounting, give Weidner Law a call at 727-954-8752 today.
