INSIGHT

How to Read a Fiduciary Accounting Report 

Natalie Keam, Cindy Schoelen • May 1, 2026

Services: Fiduciary Accounting

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When you receive a fiduciary accounting report for a trust or estate, the document can look dense at first glance. But its structure follows a logical pattern, and understanding that pattern makes it much easier to spot what matters, ask the right questions, and confirm that the account is being administered properly.

Whether you are a trust beneficiary reviewing trust accounting records, a trust administrator reviewing your own work, or a family member overseeing estate accounting for a loved one, the guide below explains how a fiduciary accounting report is organized and what to focus on when reviewing one.

What is a Fiduciary Accounting Report?

A fiduciary accounting report is a formal statement showing how a fiduciary, typically a trustee or executor, has managed assets held on behalf of others. It documents every financial transaction during a given period and presents a snapshot of the account’s assets at the close of that period.

The report is not the same as a tax return or an investment statement, even though it draws on similar information. Its purpose is accountability: it shows beneficiaries, co-trustees, and courts exactly what came in, what went out, and what remains.

In California, fiduciary accounting standards are governed by the Uniform Fiduciary Income and Principal Act (UFIPA), which took effect in 2024, updating prior rules governing how receipts, expenses, and distributions are classified between principal and income.

The Principal and Income Distinction

One concept shapes almost every line of a fiduciary accounting report: the division between principal and income.

Principal refers to the underlying assets of the trust or estate, such as real property, stocks, and business interests. Income refers to what those assets generate, such as dividends, interest, and rent. Expenses and distributions are similarly categorized as principal or income charges.

This distinction matters because different beneficiaries often have different interests. An income beneficiary, such as a surviving spouse, may receive only the income generated by the trust during their lifetime. A remainder beneficiary, such as an adult child, receives the principal when the trust terminates. How transactions are allocated between the two can directly affect what each beneficiary ultimately receives.

The Main Sections of the Report

A well-structured fiduciary accounting report typically contains the following components.

Credits*

The credits section is typically where a fiduciary accounting begins. Credits show what came into the estate and increase the estate balance. This section captures the estate assets received at the start of probate, such as cash, property, and investments, along with income earned during administration, sale proceeds, and any refunds or repayments to the estate. Credits, in short, document every source of value that entered the estate.

Additional Property Received

As the estate is administered, additional assets may come in after the initial inventory, such as a previously unknown account, a settlement payment, or property transferred in following the date of death. These are recorded separately from the opening credits to show what was added to the estate after administration began.

Charges*

Charges show what went out of the estate and decrease the estate balance. Common charges include court costs and filing fees, attorney, accountant, and appraisal fees, executor or administrator compensation, funeral and burial expenses, property expenses such as insurance, utilities, and repairs, and debt payments and taxes paid by the estate. Simply put, charges explain how estate money was spent.

Schedule of Receipts

This schedule breaks down income and principal receipts in detail, such as dividends received on securities, rental income, or proceeds from the sale of property.

Schedule of Disbursements

This details the expenses, fees, and costs paid out of the trust or estate during administration that reduce the balance, showing where money was spent before distributions to beneficiaries. Reviewing this schedule closely is often where questions about management decisions surface.

Schedule of Assets

At the end of the report, you will find a listing of all assets currently held. This typically includes both property on hand at the beginning of the accounting period and property on hand at the end, giving you a clear view of what changed.

Each asset is generally shown at its acquisition value (or carrying value) alongside its current fair market value. These two figures are often different, and both matter: carrying value is used for accounting purposes, while fair market value gives a clearer picture of what the trust or estate holds today.

Gain or Loss on Sales

If assets were sold during the period, this section shows the original cost basis, the proceeds received, and the resulting gain or loss. This affects principal, not income, in most cases.

What to Look For When Reviewing the Fiduciary Accounting Report

Once you understand the structure, a few areas deserve particular attention.

Check for Continuity Between Periods. Confirm that the beginning balance in the current report matches the ending balance from the prior period’s report. A discrepancy here warrants an explanation.

Review Disbursements for Reasonableness. Fiduciary fees, professional fees, and administrative expenses should be consistent with the size and complexity of the account. Unusual or unexplained charges are worth questioning.

Pay Attention to Principal and Income Allocations. Certain receipts and expenses can be allocated to either category at the trustee’s discretion or under specific statutory rules. Under UFIPA, some of those allocation rules changed. A few common examples involve items split 50/50 between principal and income: trustee fees, certain tax preparation costs, and expenses related to property that generates both income and appreciation, such as a rental property. If you are unsure whether an allocation is appropriate, a fiduciary accounting professional can review it with you.

Compare the Schedule of Assets to Prior Accountings. If assets appear to be missing or have changed significantly without explanation, that is a conversation to have with the trustee or your advisor.

When to Involve a Professional

Reading a fiduciary accounting report is not the same as auditing one. A beneficiary encounters many questions, such as whether a trustee’s fee is reasonable, whether an expense was properly charged to principal or income, or whether a sale was made at fair value, that will require the judgment of someone with accounting or legal experience in trust and estate matters.

If something in the report does not add up, or if you simply want confidence that the account is being managed correctly, BPM’s fiduciary accounting service professionals can review trust accountings and estate accountings, identify discrepancies, and work with you to address them. Contact BPM to get started.

Terminology note: The terms “charges” and “credits” can feel counterintuitive. In many trust accountings, charges represent amounts added to the account and credits represent amounts paid out. Probate accountings may use different conventions. The most important point is to understand whether an entry increases or decreases the overall balance.