OHIO TRUST ACCOUNTING REQUIREMENTS

What Is a Trust, and how does it work?

Trusts are legal documents that designate a trustee (or trustees) to monitor and manage a grantor’s assets when the latter is either incapacitated or has passed away. Grantors may also want trustees to manage a trust while the former is still alive. In such a scenario, only the grantor and not the beneficiaries can get trust accounting.

However, beneficiaries (the individuals the trust is made for) have the right to receive specific information about the trust since it relates to their interests once the grantor has passed away.

When a grantor establishes a trust, it is normal for them to label themselves as the beneficiary and trustee of the estate. However, they can usually appoint successor trustees to manage their trust upon their demise or incapacitation. Sometimes, the grantor can also choose several trustees, usually called co-trustees.

These individuals usually have the same mandate and can act independently. However, there are instances where co-trustees are required to work together. So, when do Ohio co-trustees have to act jointly? Ideally, co-trustees usually act jointly to ensure proper trust administration.

What happens to an Ohio trust when someone dies?

Many living trusts established in Ohio instantly become irrevocable once the settlor dies. This usually means that the designated beneficiaries remain beneficiaries automatically unless the trust is contested, which generally results in the invalidation of a trust.

In such instances, beneficiaries must pay mandatory probate fees and apply to an Ohio court to confirm the trust’s validity and the trustee placed to manage the assets and trust. So, to answer the question of when Ohio probate is required? It is necessary when the settlor/grantor passes away and leaves the trust in their name.

In such cases, the beneficiaries need to consult the Best Ohio Trust Litigation Attorney on the most viable legal approach and advice on how to proceed.

What is Trust Accounting?

Beneficiaries have the legal right to know how the trust assets are managed, the compensation details of trustees, the disbursements made, and the incomes and expenses pertaining to the trust’s property. All these details are availed to every beneficiary as trust accounting.

Trust accounting means a detailed record comprising all the vital information on all expenses and incomes of trusts. Various details should be included in trusts, among them information on:

• Expenses and fees paid to the trustees’ advisors, like financial advisors and lawyers
• All taxes paid, losses and gains on the assets of a trust, and the distributions made to the beneficiaries of the trust.
• Expense and compensation reimbursements are disbursed to trustees.

In order to prepare an accurate and detailed trust accounting, all account statement copies, trust property inventory, and receipts should be kept. It is important for trustees to maintain an organized record trail and also use appropriate financial planning software for proper investment and expense tracking. Every trust needs to perform trust accounting annually. Once the trust is fully settled, a financial account is also necessary.

What to know about Trust Accounting Requirements in Ohio:

There is a lot of vital information that you need to understand when it comes to trust accounting. However, the following is a detailed outline of some important components of Ohio trust accounting requirements:

Reporting & reporting frequency:

A trustee is also mandated by law to send a report on a trust atleast yearly and also when the trust is terminated to all the beneficiaries. This is usually called trust accounting. This report should usually include important details like the properties, disbursements, receipts, and liabilities, inclusive of the sources and amount of the compensations to the trustee, and a detailed list of the assets (and market value) in the trust.

Trustees are required to give an annual report of all the activities in a trust to all the trust’s beneficiaries. Moreover, this reporting should be performed whenever beneficiaries make a request for it.

Details to be included in all accounting reports of a trust:

All financial transactions that are linked to a given trust need to be reported (for a given reported period). This report can include various aspects, including all administration costs, lawyer’s fees, and tax payments. It can also include the income of a trust (like from the sale of property in the trust or rental income from properties).

• Trustees under Ohio law must notify the beneficiaries of the trust within 60 days of accepting the role of a trustee of their acceptance of the role. This is together with notifying them of the name, telephone number, and address of the trustee.
• Additionally, within the stipulated 60 days after the trustee gets the information of the establishment of an Ohio irrevocable trust or the date when a trustee gets information that a previously revocable trust is now irrevocable, trustees must inform the beneficiaries of the trust’s existence. Also, the trustee must inform them of the grantor/settlor’s identity, the right to request copies of the trust instrument, and also the right to get a report from the trustee as you will see below.
• A trustee, when requested, must offer the beneficiary copies of the overall trust document. Unless a beneficiary specifically asks for a copy of the whole trust document, a trustee can provide the beneficiary with a redacted copy of the trust that comprises only the provisions of the trust that are vital to the interests of the beneficiary in the trust. However, if a beneficiary asks for a copy of the whole trust document after getting the redacted copy, trustees are legally mandated to produce a copy of the whole trust document.
• Beneficiaries of a trust can waive the right to a trustee’s report, which can also include other details that a trustee needs to disclose to the beneficiary. Beneficiaries can also withdraw waivers previously given concerning future accounting reports and other vital details.

Exceptions to the Ohio Trust Accounting Requirements:

When it comes to trusts, there are usually instances where the specified trust accounting requirements may be streamlined. How? For instance, in cases where trustees are also beneficiaries of a given trust, you can simplify the reporting (or bypass it entirely).

It is vital that all trustees understand that there are numerous details that go into trust accounting requirements in Ohio, and failing to fulfill these requirements may lead to the removal of trustees from their position or, worse, facing breach of fiduciary lawsuits).

Trustees, in satisfying their fiduciary obligations, should keep the beneficiaries well informed about the overall trust administration and of all the important facts necessary for the beneficiaries to safeguard their interests.

Note: Trust beneficiaries must understand that trustees usually have a fiduciary duty to always perform in their best interest. If trustees, for whatever reason, fail to do this, and the beneficiaries can produce valid reasons or evidence to prove so, they must file for a fiduciary misconduct claim against the mentioned trustee.

If the trustee is found guilty of fiduciary misconduct, the trustee can be removed from their position. In such instances, the beneficiaries can file for an Ohio Affidavit of Successor Trustee to replace the trustee, although this is also filed where the trustee has died.

What are the rights of beneficiaries in a trust contest?

A trust beneficiary has the legal right to contest a trust if they have a valid reason for contending. However, it is essential to understand that disliking the outlined terms of the trust is not a valid reason for starting an Ohio contested trust case. Also, a contest cannot be initiated by an individual who doesn’t have any financial stake in the contest outcome.

Some of the valid reasons that can lead to a contested trust are:

• Suspicion that a trust is a forgery
• Suspicion that legal procedures were ignored when establishing or implementing the trust
• Suspicion of elder financial abuse having played a part in the establishment or implementation of a trust
• Suspicion that fraud or undue influence played a part in the establishment or implementation of a trust

What are the rights of a beneficiary in a trust’s property dispute?

As a beneficiary, you have the right to issue a claim to try and recover any damaged or lost property if you believe that property in the trust has been lost, misappropriated, or damaged by other parties.

Property disputes in a trust can occur in various scenarios, including:

• Trust property has been stolen
• Damage to trust property
• The assets of a trust are being held by a descendant’s family member (a surviving spouse, for instance), a third party, or a descendant’s estate.

In the event of a dispute over the properties of a trust in Ohio, it is important for the beneficiaries to consult with the Best Ohio Trust Litigation Attorney to impose their legal rights. The attorney is also important in helping the beneficiaries claim Ohio Breach of Fiduciary Duty Damages for compensation for losses especially caused by fiduciary breaches of conduct and other illegal activities.

For the Best Ohio Trust Litigation Attorney and professional trust accounting in Ohio

If you are a beneficiary in a given trust and want to enforce your rights to an irrevocable or living trust in Ohio, this is the place to be. Our team of expert probate lawyers is experienced and equipped effectively to offer professional trust accounting assistance and also tackle all trust-related disputes.

Good luck!