119: Tools and Tips for Preparing an Accounting with Heather Hamilton

If you’re someone who is serving in the role of trustee, executor, conservator, or guardian, acting as a personal representative for someone’s estate in California, did you know that the state has specific guidelines for probate accounting? According to section 16062, the California probate code requires representatives to provide an accounting at least once a year. The purpose is usually two-fold: to show beneficiaries what assets exist, how they’ve been handled, how much is left to be divided up, and to show the individual in control of the money is doing their job.

“Unlike giving a few specific documents to your CPA to prepare for a tax return, we need everything – every transaction that happens within a trust estate or conservatorship. It’s a lot of information.”

The problem is that most people whose names are tasked with the role of trustee or conservator have no idea how to prepare this type of formal accounting. Even for those confident in their accounting skills, the process is technical, tedious, and can be wrought with many opportunities for mistakes. The good news is you don’t have to do it alone. There are professionals who do complete probate code-compliant accounting for a living. One of these professionals, Heather Hamilton, founder of Fiduciary Accounting Services, LLC (FAS), is joining us on this episode of Absolute Trust Talk.

Heather holds a bachelor’s degree in finance from California State University, Chico, and worked in commercial banking for 15 years before founding FAS in 2007. The goal of this company was to focus purely on fiduciary accounting, making this expert service more available and taking the load off the shoulders of others. Since then, FAS has grown to be the largest provider of accounting for trusts, estates, and conservatorships in California, focusing entirely on fiduciary accounting.

Join us as we discuss:

  • The particular challenges that come with fiduciary accounting, both for the accountants and the clients
  • Why you may need a fiduciary accounting in the first place
  • What is required for this type of accounting
  • Tips and advice on how to ensure a smooth accounting process
  • And much more!

Whether you need formal probate-compliant accounting now or you’re preparing for the future, this episode will help you understand what to expect and how to prepare and even show you what to avoid. So, find a cozy spot, and let’s get started!

Big Three from Episode #119:
  1. Keep things organized and on hand. When you have to do a formal probate-compliant accounting, you’ll need all records – even ones you may not think are important. Gathering all this is the hardest part, so keep track of everything from bank statements to login information. Pro-tip for planning ahead: ask the trust’s grantor for a roadmap of where everything is so you, as the trustee, can find what you need when the time comes.
  2. Make sure your assets have been titled to the trust! The first thing that must be dealt with in an accounting is what are the assets because that’s what you will account for, and if your assets aren’t in the trust, that can be a big issue that causes more time and money that could have been avoided.
  3. Don’t be afraid to get help. It’s common for people to hire and outsource support for various trust administration tasks because managing accounts can be very time-consuming. You don’t have to do it all by yourself. Nor do you have to have all the answers. When in doubt, consult your attorney.

Time-stamped Show Notes:

0:00 Introduction

1:16 The purpose of accounting is for two main reasons. One is to show the beneficiaries what assets exist and to show that the person in control of the money is doing their job properly.

2:37 Find out how Heather, one of the most skilled practitioners of fiduciary accounting in California, got into preparing accounting as a career.

4:03 Believe it or not, the most challenging part of accounting isn’t working with numbers or understanding the laws – it is getting the full story from the client.

6:04 If you’ve made mistakes with your accounting, working with professionals like FAS can help you fix them without guilt.

6:28 So far, we’ve discussed the biggest challenges for the accountant, but what about for the client? Gathering ALL the information needed.

7:40 Madison and Heather discuss in more detail what gathering all the information might look like.

9:26 Next, Heather shares more about the types of people who receive accounting services from her firm. They range from trust and estate attorneys to individual trustee conservator clients.

10:07 FAS only takes on cases in accordance with the probate code, so there are no divorce issues, forensic business accounting, or cases like that.

11:30 Heather’s number one piece of advice for clients? Consult your attorney! FSA does not provide legal services, so all clients must have counsel.

13:59 Interested in learning what you can do now to make future accounting go smoothly? Clear communication about why a trust is set up a certain way to avoid arguments and provide a roadmap of where everything is.

18:34 One of the biggest mistakes we run into is clients not titling the assets in their trust. Learn what we mean by this and how you can fix it here.

21:05 Trustees can make accounting more straightforward by keeping records and consolidating accounts.

23:55 Keeping records can go beyond cash assets, including jewelry and art. As a trustee, you are responsible for keeping track of where the specific asset is and what you’re doing with it.

25:33 Credit card usage is a no-go. Here’s why.

27:47 How should you handle securities like stocks and mutual funds? What about things like trading options or crypto? Turn off dividend reinvestment and talk with a financial advisor about liquidating those assets.

31:08 Three tips for how clients can keep things organized: Keep everything, turn off all automatic bills and subscriptions, and consider hiring someone to be the trustee.

38:30 Sometimes, people want to do an informal accounting themselves, but Heather advises against it for several reasons. Most importantly, there is no point in doing the accounting a second time.

43:40 Q&A: Why wouldn’t you have your CPA do the accounting for you, or can you have your CPA do it?

Get in Touch with Heather Hamilton:

Managing Principal
​Fiduciary Accounting Services, LLC
201 North Civic Drive, Suite 340
Walnut Creek, CA 94596
Main: 925/247-5970
Direct: 925/377-5390

 

Resources/Links Mentioned in this Episode:

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