Understanding Trust Accounting

We here at Clockwork Accounting talk about a lot of different types of accounting. Today, we’ll delve into some of the basics trust accounting.

In order to understand this subject, we’ll need to start off by defining trust accounts. A trust account is basically an account of money, land, etc. that has been deposited and is controlled by a trustee. After the trustee passes away, the goods (if there are any left) are passed on to a previously-designated party.

Some trust accounts may have limitations as to what the trustee can do with the money/item in the account. For example, maybe the trustee is only allowed to use up to 50% of the resource. In most cases, the trustee has free-reign over the trust account.

It turns out that accounting for trusts is actually a subsection of a larger area of accounting known as fiduciary accounting. Basically, when dealing with these types of transactions, you have to account for them in a specific way for tax purposes.

Some Great Trust Accounting Resources:

Delta Data has probably come out with the best trust accounting software in the industry. The software can be used to manage different accounts and it can also print out some pretty nifty reports.

The AICPA has actually written a book on the subject. I wouldn’t really enjoy reading the thing, but if you want to be an expert in the area, this book is a must. It is called Fiduciary/Trust Accounting: A Comprehensive Practice Guide. If you are a member of the AICPA then it goes for around $130 if you aren’t then it costs about $160.

InfoVisa claims to have made one of the best trust accounting systems in the world. They released the first trust application for Windows. Usually the software that has been around the longest is the best because it has had time to go through all of the bugs.

OneSource Trust Tax: This company has both trust software and trust services. So if you have no idea of what you are doing, this may be right up your alley.

EasySoft: If you are looking to go out and buy a package like Windows, bring it home, and install it in your computer then EasySoft probably has the best trust software for you. It is priced reasonably at $249 and seems to have all the features most people would need.

Well that about sums up our discussion on trust accounting. The truth is we couldn’t delve in as deep here because every state has slightly different rules. For more information try checking out your state’s websites. The best one I have found on the matter is www.ncbar.gov/PDFs/trust_faq.pdf.  It is a pdf, but it has some great content on the subject.