What does "trust accounting" involve?

Trust accounting fundamentally involves recording transactions involving trust assets. This includes meticulously documenting all financial activities related to the trust, such as income received, distributions made to beneficiaries, expenses paid, and any changes in asset values. Accurate and detailed trust accounting is essential for ensuring accountability and transparency, enabling trustees to provide beneficiaries with clear and comprehensive reports regarding the financial status of the trust.

The importance of trust accounting extends beyond mere record-keeping; it serves as a critical tool for compliance, ensuring that fiduciaries are fulfilling their duties in accordance with the trust's provisions and applicable laws. Proper trust accounting helps to protect the interests of beneficiaries and maintain their trust in the management of the trust assets.