Trust Accounting

Trust Accounting

Trust accounting is the measurement and calculations of all funds gained and lost that are available for distribution to the beneficiaries of the trust. In order for a trust to function properly, it is just like a checking account. It needs to be balanced. Trust accounting is essential to any actively operating trust fund regardless of the methods being utilized to operate the fund and must be completed by a responsible person or company. At the end of the day, the checks and balances must be applied and noted for each and every action taken within the account essentially to apply future disbursement and eventually leading to a zero balance.



In its simplest form trust accounting is the total amount of available funds eligible for distribution minus the expenditures necessary for maintaining the account. Maintaining your most basic trust fund is just like maintaining your check book. Every inbound deposit and outbound payment must be listed in chronological order. The checks and balances can be maintained by the newest methods of utilizing computer programs to maintain the ledger.

One can also provide basic management by the oldest method known to man, paper. Generally, it is preferred that a ledger not only contain the incoming and outgoing funds but also some form of a sub-ledger that can provide more detailed information about these transactions. Which will allow the manager the ability to easily track and record their liabilities at the end of the disbursement period whether it be per month, per quarter, or per year. 


Quite often additional ledgers are essential especially if the account contains outside elements such as properties. Generally, these will be listed in the form of a sub-ledger and contain all the detailed information such as names, addresses, dates, amounts, and any balances owed.

For example, in the instance the manager is responsible for physical property such as a rental or community association extended sub-ledgers are necessary to keep the account in good standing when deductions must be made. There are always outside expenditures associated with the properties, such as maintaining the property, correcting issues and even the taxes that are required at the end of each year for every property owned and operated.



In whole, each and every trust fund must be maintained by means of trust accounting regardless of what is desired by the beneficiary. When dealing with smaller less complicated situations this accounting may be able to be kept at a low range and essentially not cost an arm and a leg. However, in the event your maintaining a fund that is inclusive of three properties two of those being apartment complexes and multiple different investments your trust accounting could turn out to be pretty costly. The expense for maintaining the funds when completed by a trust accounting business or accountant will always be worthwhile in the end.

In addition, addition the detailed information that will be include far outweighs that which is necessarily required by law and also ensures that the manager is going above and beyond to ensure your fund is secure.

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