Book Details

Fiduciary Accounting: Principles, Modern Applications, Illustrations

By Mark R. Gillett, Katheleen Guzman, Kelly Bruns

  • ORDER HARD COPY: 2010
  • softcover
  • 256 pp.
  • ISBN: 9780831899783
  • Order Code BK71
  • $24.00
  • ONLINE: 2010
  • Online
  • 256 pp.
  • $24.00

For the most practical advice--and comprehensive, sample accounts. 

More than 150 illustrations showing how to prepare specific fiduciary accounting entries 

Meticulous explanations with special text

Helpful forms and checklists 

Detailed instructions on how to maintain and retain appropriate trust records (in compliance with the National Fiduciary Accounting reports)

What information a Trustee’s reports to Beneficiaries must include

Schedules showing to whom reports must be sent, and how often

Best practices for reducing the threat of litigation against fiduciaries

Trust provisions that can limit the Trustee’s accounting and reporting duties (and warnings about which trust provisions will likely be held ineffective)

 

Overview

Trustees and other fiduciaries who prepare accounts must understand basic accounting concepts. The authors clearly explain those fundamental concepts for purposes of demonstrating how an estate’s principal and income accounts—and assets and liabilities—are affected by typical post-mortem transactions.

 

Fiduciary Accounting: Principles, Modern Applications, and Illustrations describes in detail the difference between income and principal, defines terminating income interests, explains how distributions are reflected on fiduciary accounting reports, and sets forth how to account for and explain gifts of specific assets. Most helpfully, the authors describe and illustrate how fiduciaries can account for both typical and more sophisticated investment options. The more than 150 illustrations show how to prepare specific fiduciary accounting entries. These illustrations are explained in full detail, giving fiduciary accountants a step-by-step instruction guide. Helpful forms and checklists are also included throughout the text.

 

Get answers to your questions and easy to follow solutions to the typical (and not-so-typical) situations you or your client will face as a fiduciary, including:

When a Trustee has the authority to make adjustments and discretionary allocations between income and principal, given that the Uniform Prudent Investor Act may trump certain trust provisions

How to satisfy the duty of impartiality to different classes of Beneficiaries

Whether and when to administer in reliance on the terms of the trust, or to administer in accordance with the UPIA or Statute despite the terms of the trust

How to gather sufficient information to inform a discretionary decision and avoid court intervention

How to avoid liability for predecessor fiduciaries’ (such as executors’) breaches of duty

What to include in an initial inventory of trust (or estate) assets, how to determine fiduciary acquisition values (as opposed to tax basis), and whether to include assets in principal or in income

How to avoid liability for events occurring before the receipt of assets which were not initially included in the inventory

How to determine what is payable as income and what is principal

How to calculate and report the Trustee’s basis, gain, and loss on assets bought and sold by and contributed to a trust

How best to account for liabilities of an estate

Which items that should be included in the estate’s income tax return and not in the decedent’s final income tax return, and vice versa

How to account for various receipts to the trust (entity receipts, mutual fund capital gain distributions, dividends, property other than money, liquidating distributions, insurance policy proceeds, deferred compensation, IRAs, derivatives and options, securities, etc.), and whether to allocate them to principal or to income

How to reinvest dividends without unfairly and unreasonably diminishing trust income

What a trustee may account for as a separate business from the other trust assets, which gives greater flexibility in income/principal allocations

How to meet the obligation to make trust assets productive

How to account and adjust principal and income for property depreciation

When to adjust from principal to income – and when not – in accounting for bonds bought, sold, and held by the Trustee

How to account for and report disbursements for trust administration, and which expenses to charge against income versus against principal

Why it might be unwise to use trust income to make principal payments on debt in excess of depreciation reserves

How to properly allocate trust taxable income charges to principal and income accounts

How post-mortem tax planning and tax elections can inadvertently cause adverse consequences to different classes of beneficiaries, and how to adjust (and when not to adjust) principal and income to compensate

How to avoid marital deduction reductions from taxes, expenses, and fees, and the difference between administrative and transmission fees

How to satisfy the prerequisites for a Trustee to exercise her discretionary adjustment power to adjust between income and principal, and other important factors to consider

How to comply with the rules for successive income interest beneficiaries

How to calculate, account for, and allocate the net income during the administration period on property of the estate to produce a fair result

Where tax returns should mirror trust accounting, and where they should not

How to account for distributions from principal and from income, and which gifts are chargeable to which accounts

How to account for gain or loss upon distribution of gifts or other assets from an estate or trust, including fractional, disproportionate, and in-kind distributions

How to use and account for different gift funding formulae

How a fiduciary can avoid liability for damages for breach of trust for failure to expeditiously distribute trust property

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About the Author

 

Mark R. Gillett, Arch B. and JoAnne Gilbert Professor of Law, received an undergraduate degree in Mathematics/Computer Science from the College of William and Mary (Cum Laude) in 1975, a J.D. from Arizona State University (Magna Cum Laude) in 1977, and an LL.M. (Taxation) from New York University in 1982. He has been a Professor at the University of Oklahoma, College of Law since 1987 where he regularly teaches Estate and Gift Tax, Estate Planning, Fiduciary Income Tax, and Wills and Trusts. The frequently published Professor Gillett is best known for his work in connection with estate management software that dates back nearly thirty years.


Katheleen R. Guzman, Orpha & Maurice Merrill Professor of Law, earned a B.A. with honors (1987) and a J.D. with highest honors (1991) from the University of Arkansas and an LL.M. (1992) from the Yale Law School. After working as an associate with Dilworth Paxson Kalish & Kauffman in Philadelphia, Professor Guzman joined the University of Oklahoma College of Law in 1993. Her teaching and scholarship focuses on assorted property and wills and trusts courses.


Kelly Bruns received an undergraduate degree in Psychology with a minor in Political Science from the University of Minnesota in 1984, and a J.D. from William Mitchell college of Law in 1991. Since 1993, Ms. Bruns has been involved with online legal research and software development, training, and support. For the past thirteen years, she has supported and helped design estate management software.

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Free Downloads

Table of Contents

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Abbreviated Table of Contents

Chapter 1 Duty to Account

Chapter 2 Uniform Principal and Income Act

Chapter 3 Inventories

Chapter 4 Receipts

Chapter 5 Disbursements

Chapter 6 Adjustments

Chapter 7 Income Interests

Chapter 8 Estate Net Income

Chapter 9 Distributions

 

 

Figures

Fig. 1-1 National Fiduciary Accounting Reports; Custom Footer
Fig. 3-1 GEMAcct Predefined Asset Classifications
Fig. 3-2 Asset Inventory
Fig. 3-3 Receipts of Principal Report
Fig. 3-4 Receipts of Principal; Custom Descriptions
Fig. 3-5 Receipts of Principal; Individual Assets
Fig. 3-6 Receipts of Principal; Sorting Assets
Fig. 3-7 Receipts of Principal Report; Sorting Assets
Fig. 3-8 Inventory of Bond and Interest
Fig. 3-9 Posting of Interest
Fig. 3-10 Miscellaneous Report (Accrued Dividends/Interest)
Fig. 3-11 Cash Receipt, Sale/Collection of Asset
Fig. 3-12 Supplemental Receipts
Fig. 3-13 National Fiduciary Accounting Reports
Fig. 3-14 National Fiduciary Accounting Reports
Fig. 3-15 Existing Entities
Fig. 3-16 Miscellaneous Property; Testamentary Trusts
Fig. 3-17 National Fiduciary Accounting Reports; Adjustments
Fig. 3-18 Inter Vivos Trusts: Common Stocks
Fig. 3-19 Receipts of Principal/Principal Balance on Hand
Fig. 3-20 Adjust Carrying Value
Fig. 3-21 Liabilities
Fig. 3-22 Liabilities; Disbursement of Principal
Fig. 3-23 Liabilities
Fig. 3-24 Deductions in Respect of Decedent (DRD)
Fig. 3-25 Non-Cash Transaction, Other
Fig. 3-26 Subsequent Accountings
Fig. 4-1 Receipts of Income (Interest)
Fig. 4-2 Receipt of Income/Principal
Fig. 4-3 Receipts of Income Report
Fig. 4-4 Cash Receipts and Disbursements by Date
Fig. 4-5 Receipts of Income Report
Fig. 4-6 Cash Receipt, Sale/Collection of Asset
Fig. 4-7 Cash Receipt, Other
Fig. 4-8 Gains/Losses on Sales and Other Disposition Report
Fig. 4-9 Cash Dividend
Fig. 4-10 Non-Cash Transaction, Transaction Type 2
Fig. 4-11 Non-Cash Transaction, Other
Fig. 4-12 Non-Cash Transaction, Other
Fig. 4-13 Cash Transactions, Receipt of Income/Principal
Fig. 4-14 Non-Cash Transaction Between Principal/Income
Fig. 4-15 Cash Receipt, Other
Fig. 4-16 Cash Receipt, Other
Fig. 4-17 Estates and Other Trusts
Fig. 4-18 Cash Receipt Allocable to Principal
Fig. 4-19 Non-Cash Transaction, Transfers Between Principal/Income
Fig. 4-20 General Information; Businesses Treated as Separate Entity
Fig. 4-21 Businesses Treated as Separate Entity (Other Real Property)
Fig. 4-22 Non-Cash Transaction, Transfers Between Principal/Income
Fig. 4-23 Cash Receipt, Receipt of Income
Fig. 4-24 Cash Receipt, Collection/Sale of Asset
Fig. 4-25 Cash Receipt, Other
Fig. 4-26 Cash Receipt, Sale/Collection of Asset (Life Insurance)
Fig. 4-27 Cash Receipt, Other (Life Insurance)
Fig. 4-28 Life Insurance, Supplemental Inventory
Fig. 4-29 Cash Receipt, Receipt of Income (Environmental Costs)
Fig. 4-30 Non-Cash Transaction (No Beneficiary)
Fig. 4-31 Receipt of Rent
Fig. 4-32 Non-Cash Transaction, Transfers Between Principal/Income
Fig. 4-33 Non-Cash Transaction, Other
Fig. 4-34 Security Deposits
Fig. 4-35 Cash Disbursement, Payment of Liability
Fig. 4-36 Non-Cash Transaction, Other
Fig. 4-37 Prepaid Rent
Fig. 4-38 Non-Cash Transaction, Other
Fig. 4-39 Cash Receipt, Other
Fig. 4-40 Non-Cash Transaction, Transfers Between Principal/Income
Fig. 4-41 Cash Receipt, Receipt of Income (Interest Payment)
Fig. 4-42 Cash Disbursement, Acquisition of Asset
Fig. 4-43 Cash Receipt, Collection of Accrued Income
Fig. 4-44 Transfers Between Principal/Income
Fig. 4-45 Acquisition of Asset (Bond)
Fig. 4-46 Cash Receipt, Sale/Collection of Asset (Bond)
Fig. 4-47 Sale/Collection of Asset (Bond)
Fig. 4-48 Cash Receipt, Other (Bond)
Fig. 4-49 Cash Receipt, Receipt of Income (Insurance)
Fig. 4-50 Cash Receipt, Receipt of Income (Stock)
Fig. 4-51 Cash Receipt, Other (Annuity)
Fig. 4-52 Cash Receipt, Other (Annual Lottery Payment)
Fig. 4-53 Cash Receipt, Other (Royalty Payment)
Fig. 4-54 Cash Receipt, Other (Timber)
Fig. 4-55 Non-Cash Transaction, Other (Timber)
Fig. 4-56 Cash Transactions (Call Option)
Fig. 4-57 Cash Transactions (Call Option)
Fig. 4-58 Non-Cash Transactions (Call Option)
Fig. 4-59 Call Option (Trust as Writer)
Fig. 4-60 Call Option (Trust as Writer)
Fig. 4-61 Call Option (Non-Cash Transaction)
Fig. 4-62 Put Option (Trust as Holder)
Fig. 4-63 Put Option (Trust as Holder)
Fig. 4-64 Put Option (Non-Cash Transaction)
Fig. 4-65 Put Option (Trust as Writer)
Fig. 4-66 Put Option (Cash Transaction)
Fig. 4-67 Put Option (Non-Cash Transaction)
Fig. 4-68 Cash Receipt, Receipt of Income (Operating Receipts)
Fig. 4-69 Cash Receipt, Other (Operating Receipts)
Fig. 4-70 Cash Receipt, Other (Operating Receipts)
Fig. 4-71 Liquidating Receipts
Fig. 4-72 Liquidating Receipts (Cash Receipt, Other)
Fig. 4-73 Liquidating Receipts (Non-Cash Transaction)
Fig. 5-1 Disbursements of Income
Fig. 5-2 Disbursements of Income Report
Fig. 5-3 National Fiduciary Accounting Reports; Cash Receipts/Disbursements
Fig. 5-4 Disbursements of Income Report
Fig. 5-5 Cash Disbursement, Payment of Expense
Fig. 5-6 Cash Disbursement, Other
Fig. 5-7 Cash Disbursement, Payment of Expense
Fig. 5-8 Cash Disbursement, Acquisition of Asset
Fig. 5-9 Cash Disbursement, Payment of Liability
Fig. 5-10 Non-Cash Transaction, Other (Farm Buildings)
Fig. 5-11 Cash Disbursement, Other
Fig. 5-12 Non-Cash Transaction, Transfers Between Principal/Income
Fig. 5-13 Cash Disbursement, Other
Fig. 5-14 Transfers Between Principal/Income
Fig. 5-15 Cash Disbursement, Acquisition of Asset
Fig. 5-16 Non-Cash Transaction, Other
Fig. 5-17 Non-Cash Transaction, Transfers Between Principal/Income
Fig. 5-18 Non-Cash Transaction, Transfers Between Principal/Income
Fig. 5-19 Cash Disbursement, Other (Income Taxes)
Fig. 5-20 Cash Disbursement, Payment of Expense
Fig. 6-1 Mandatory Adjustment Between Principal/Income
Fig. 6-2 Mandatory Adjustment (Cash Receipt, Receipt of Income)
Fig. 6-3 Discretionary Adjustment Between Principal/Income
Fig. 6-4 Distributions of Specific Accounts
Fig. 6-5 Cash Disbursement, Payment of Expense
Fig. 6-6 Cash Receipt, Receipt of Income
Fig. 6-7 Trustee Adjustment Between Principal/Income
Fig. 7-1 Cash Transaction, Allocating Receipt to Principal
Fig. 7-2 Cash Transaction, Receipt of Income/Principal
Fig. 7-3 Cash Transactions, Other (Tax Refund)
Fig. 7-4 Cash Transaction, Income Interest
Fig. 7-5 Distributions of Specific Accounts
Fig. 7-6 Non-Cash Transaction, Other (Undistributed Income)
Fig. 8-1 Cash Disbursement, Payment of Expense (Pecuniary Request)
Fig. 8-2 Distributions to Beneficiaries
Fig. 8-3 Distributions of Specific Accounts
Fig. 9-1 Beneficiaries
Fig. 9-2 Beneficiary Information
Fig. 9-3 Distribution Descriptions
Fig. 9-4 Distributions of Specific Accounts (Pecuniary Gifts)
Fig. 9-5 Distributions of Specific Accounts (Pecuniary Amount)
Fig. 9-6 Distributions to Satisfy Pecuniary Amount
Fig. 9-7 Distributions to Satisfy Pecuniary Amount (Marital Trust)
Fig. 9-8 Distributions to Satisfy Pecuniary Amount
Fig. 9-9 Distributions to Satisfy Pecuniary Amount (Marital Trust)
Fig. 9-10 Distributions to Satisfy Pecuniary Amount
Fig. 9-11 Distributions to Satisfy Pecuniary Amount (Marital Trust)
Fig. 9-12 Distributions of Specific Accounts (Pecuniary Interest)
Fig. 9-13 Cash Disbursement, Payment of Expense
Fig. 9-14 Distributions of Specific Accounts
Fig. 9-15 Final Distribution – Fractional Shares
Fig. 9-16 Final Distribution – Pick and Choose Fractional Shares
Fig. 9-17 Final Distribution – Pick and Choose Fractional Shares

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