Trust Accounting in California: What the Probate Code Actually Requires

A trustee's duty to account is not a matter of custom or best practice. It is a statutory obligation, enforceable in court, and the consequences of getting it wrong are not merely reputational. This post sets out what California law requires of a trustee administering a trust — not as a general summary, but as a walk through the governing statutes themselves.

I. The Duty to Account Is Mandatory, Not Discretionary

Probate Code section 16060 imposes a general duty on every trustee "to keep the beneficiaries of the trust reasonably informed of the trust and its administration." Section 16062(a) makes that duty concrete: a trustee "shall account at least annually, at the termination of the trust, and upon a change of trustee" to each beneficiary "to whom income or principal is required or authorized in the trustee's discretion to be currently distributed."

The statute does not ask whether an accounting would be convenient. It requires one, on a fixed schedule, as a matter of course.

II. The Exceptions Are Narrow

Section 16064 lists the circumstances in which the accounting duty does not apply. Chief among them:

• The trust instrument itself waives the accounting requirement, subject to the limits in section 16064(a) (a waiver does not excuse a trustee from providing an accounting upon a beneficiary's reasonable written request, nor does it protect a trustee who has committed a breach of trust).

• The beneficiary and trustee are the same person. Section 16069 similarly relieves a trustee of the duty to account to a beneficiary who has, in writing, waived the right to an account — and that waiver may be withdrawn as to future accountings.

• The trust is a revocable trust and the person holding the power to revoke has not yet died or become incapacitated. Section 15800 places the settlor, not the beneficiary, in the position ordinarily held by a trust beneficiary while the trust remains revocable and the settlor is competent.

These exceptions are exceptions. They do not swallow the rule, and a trustee who assumes an accounting is unnecessary without confirming that one of these provisions actually applies does so at their own risk.

III. What the Accounting Must Contain

Section 16063 is the operative provision, and it is worth reading in full rather than summarizing loosely. An account must show:

1. A statement of the receipts and disbursements of principal and income that have occurred during the last complete fiscal year of the trust, or since the last accounting.

2. A statement of the assets and liabilities of the trust as of the end of the period covered by the accounting.

3. The trustee's compensation for the last complete fiscal year, or since the last accounting.

4. The agents hired by the trustee, their relationship to the trustee if any, and the compensation paid to each agent.

5. A statement that the recipient of the account may petition the court, under section 17200, to obtain a court review of the account and the trustee's actions.

6. A statement that claims against the trustee for breach of trust may not be made after the expiration of three years from the date the beneficiary receives an account or report disclosing facts giving rise to the claim.

The distinction between principal and income is not incidental detail. It is one of the six statutorily required components of the account, and getting it wrong is not a bookkeeping error so much as a failure to satisfy section 16063 on its face.

IV. Principal and Income Are Governed by a Separate, Detailed Statute

California adopted the Uniform Fiduciary Income and Principal Act, codified at Probate Code sections 16320 through 16375, effective January 1, 2020. UFIPA replaced the prior Uniform Principal and Income Act and substantially rewrote the rules governing how receipts and disbursements are allocated between principal and income — including new provisions addressing entity distributions, unitrust conversions, and the trustee's power to adjust between principal and income under section 16336 where the trust's governing instrument does not otherwise direct.

A trustee who administers the trust under the pre-2020 rules, out of habit or unfamiliarity with the statutory change, is applying the wrong law.

V. Failure to Account Carries Consequences the Statute Itself Specifies

A beneficiary who does not receive an accounting is not without recourse. Section 17200(b)(7) authorizes a beneficiary to petition the court to compel an accounting, and the court's authority on such a petition extends to reviewing the trustee's actions generally — not merely the arithmetic. Section 16420 further permits removal of the trustee as a remedy for breach of trust, and a trustee who breaches the duty to account may also face surcharge.

None of this depends on whether the trustee acted in good faith. A trustee's honest belief that no beneficiary was harmed does not excuse noncompliance with section 16062's mandatory schedule.

VI. The Practical Upshot for a Successor Trustee

A trustee newly stepping into the role after a death, incapacity, or resignation should not assume that prior practice, however longstanding, reflects what the statute actually requires. The accounting obligation runs to the trustee personally, from the moment letters or successor authority take effect, and it is measured against sections 16060 through 16069 — not against what the prior trustee happened to do.

A trustee who is uncertain whether a given receipt is principal or income, whether a waiver in the trust instrument is enforceable under section 16064, or whether the three-year limitations period in section 16460 has begun to run on a prior year's account, should treat those as questions requiring professional analysis before the next accounting is due — not after a beneficiary has already filed a petition under section 17200.

This post discusses the general framework of California Probate Code sections 16060 through 16069 and 16320 through 16375, and is provided for general informational purposes only. It does not constitute legal or accounting advice and does not create an attorney-client relationship. Trustees administering a specific trust should consult qualified counsel and a CPA experienced in fiduciary accounting before relying on any summary of the statute.