INSIGHT

Why the Trust Accounting Must Be Trued Up Before a Trustee Change

Cindy Schoelen • November 11, 2026

Services: Fiduciary Accounting

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A trustee change can happen for many reasons. A trustee might resign, retire, become unable to serve, or be removed. Whatever prompts the transition, understanding the financial position of the trust is one of the first new trustee responsibilities the incoming trustee takes on.

That is where the accounting true-up comes in. Bringing the trust accounting current before the transition establishes what occurred under the outgoing trustee and what assets, balances, and financial activity are carrying forward to the successor. It also creates a natural dividing point between two periods of administration. 

What Does It Mean to True Up a Trust Accounting? 

Truing up a trust accounting means bringing the financial records current through a specific date and addressing outstanding accounting items before that period is closed. The process may include reviewing transactions, reconciling accounts, confirming asset and liability balances, and making sure the records supporting the accounting are available. 

A fiduciary accounting report tracks the financial activity of the trust during a reporting period. That includes what the trust received, what was paid or distributed, and what remains at the end of the period. It may also require transactions to be properly allocated between principal and income, since those classifications can affect beneficiaries differently. 

When a trustee change is approaching, the transition date provides an important cutoff point. The outgoing trustee’s accounting period can be brought current through that date, giving the successor trustee a defined financial starting point for the next period of administration. 

Why Should Trust Accounting Be Trued Up Before a Trustee Change? 

A successor trustee inherits responsibility for administering the trust, but they did not oversee the transactions that occurred before they stepped into the role. Without an up-to-date accounting, it can be difficult to separate prior activity from what takes place after the transition. Bringing the accounting current establishes the trust’s financial position at the handoff. The successor trustee can see the assets being transferred into their administration, review the transaction history supporting those balances, and identify outstanding items that still need attention. 

The timing can also be important from a reporting standpoint. A change in trustee is one of the events that can call for an accounting outside the trust’s usual reporting schedule, depending on the governing trust document and applicable law. For beneficiaries, the true-up also provides a record of activity during the outgoing trustee’s period of administration. Instead of reconstructing that history months or years later, the relevant financial information can be addressed while the transition is taking place. 

“The biggest misunderstanding about handoff is that it’s always a clean cutoff. It often isn’t. You can have checks that haven’t cleared, expenses that haven’t been paid, deposits in transit, or transactions initiated by the outgoing trustee that don’t show up until after the successor takes over. Those items need to be identified and properly reflected so the ending accounting for one trustee lines up with the beginning records for the next.” – Cindy Schoelen, BPM Partner in Client Advisory and Accounting Services

Problems a Trust Accounting True-Up Can Uncover 

A trustee transition can bring accounting issues to the surface because someone new is reviewing information that may have been familiar to the outgoing trustee. Account balances by themselves may not explain the transactions and decisions behind them. During the true-up, you may find missing statements or transaction support, unreconciled accounts, incomplete records for distributions or expenses, or differences between the accounting records and financial statements. Prior accounting periods may also be incomplete or behind. 

“A lot of what we find during true-up is cleanup. There may be missing statements or transaction details, accounts that haven’t been reconciled, distributions without sufficient support, or questions about whether something should have been allocated to principal or income. We also see cutoff issues, like outstanding checks or expenses relating to the outgoing trustee that don’t clear until later. Addressing those items before the transition makes the handoff much cleaner for everyone involved.” – Cindy Schoelen. 

Principal and income treatment can require attention as well. Trust accounting distinguishes between the underlying principal of the trust and income generated by those assets. An incorrect classification may affect beneficiaries with different interests in the trust, making it important to address those issues as part of the accounting rather than carrying them into the successor trustee’s administration. Finding these issues during the transition gives the outgoing trustee and their advisors an opportunity to investigate the activity while the relevant records and context may be easier to obtain. 

Records to Review Before a Trustee Change 

The records required for a true-up will depend on the trust’s assets and activity, but the goal is to support the financial history reflected in the accounting. That review may include: 

• The trust agreement and any amendments 
• Prior fiduciary accountings 
• Bank and brokerage statements 
• Tax returns and related tax records 
• Records of beneficiary distributions 
• Invoices, bills, receipts, and canceled checks 
• Documentation of deposits and other funds received 
• Records related to purchases or sales of trust assets 
• Appraisals or business valuations, when applicable 
• Documentation supporting beginning and ending asset and liability balances 

The successor trustee may also need records that provide context for prior decisions. Maintaining that information can make it easier for someone with no previous involvement in the trust to understand its history and continue its administration. 

When to Bring in a Fiduciary Accountant 

A trustee change can be relatively straightforward when the accounting has been maintained consistently and the supporting records are readily available. Other transitions require considerably more work, particularly when accountings are behind, records are incomplete, or the trust holds assets that require additional accounting analysis. 

A fiduciary accountant can help review the financial records, identify gaps that need to be addressed, reconcile trust activity, and prepare the accounting associated with the outgoing trustee’s period of administration. Starting that work before the transition can help establish where the prior accounting period ends and where the successor trustee’s responsibility begins. 

BPM’s Fiduciary Accounting Services work with individual trustees, professional fiduciaries, and attorneys on trust and estate accounting needs, including transaction tracking, beneficiary reporting, and formal accountings. Preparing for a trustee change? Learn how BPM’s Fiduciary Accounting team can help you bring the trust accounting current and prepare for the transition.