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“Your Account Is Wrong”

This is the last thing any attorney who represents executors, trustees and conservators wants to hear. And yet after more than a quarter century of experience scrutinizing fiduciary accounts, our firm has concluded that virtually every high-net-worth fiduciary account filed with the court has fundamental flaws. This has resulted from the complex rules of California’s Principal and Income Act, and in particular the rules for allocating assets and expenses among subtrusts.

Here’s why.

Attorneys and CPAs Speak Different Languages. Even accounts prepared by qualified CPAs familiar with fiduciary tax issues almost never meet the standards of the Principal and Income Act. CPAs know how to apply accounting concepts, not legal rules; attorneys are trained in legal rules, not accounting concepts. So, like two people who speak different languages, the attorneys and CPAs involved in preparing fiduciary accounts predictably misunderstand each other.

This blog focuses on bridging that gap when it comes to fiduciary accountings.