Over the recent years, the answer to this question has changed due to new case law that specifically addresses the duty to account when a trust is revocable. An amendment to Probate Code Section 15800 that went into effect on January 1, 2023, that makes it clear who a trustee must provide an accounting to when the trust is revocable and the settlor is incapacitated. I assume the settlor is the person holding the power to revoke the trust but note that the code sections refer to the person holding the power to revoke.
Based on the provisions of the Probate Code and case law, the answer to the accounting question depends on a few initial items.
First, is the trust revocable or irrevocable? If the trust is irrevocable then you need to determine who the current beneficiaries are of the trust. The trustee needs to determine who is entitled to receive income or principal from the trust as those are the beneficiaries who are entitled to an accounting under Probate Code Section 16062.
However, it is important to look closely at the trust terms regarding distributions and the section that discusses accountings. Some trusts can expand the class of individuals entitled to an accounting beyond those who are currently entitled to income and principal. Also, the court can always broaden the class of who is entitled to an accounting if there is a trust matter before the court.
Second, if the trust is revocable, does the settlor have capacity? If yes, then the settlor is the party entitled to receive the accounting.
The biggest change in the law is when the settlor lacks capacity, then you must determine who are the people identified by Probate Code Section 15800(b)(2) through (4). Essentially, it is the same analysis as if the trust was irrevocable, but treating the settlor has deceased. The trustee must determine who is entitled to income and principal per the terms of the trust after the settlor’s death. There are other considerations discussed in the code section that should be reviewed, but that are beyond the scope of this post.
If the settlor is conserved, then the conservator is the person entitled to an accounting on behalf of the conservatee/settlor. If the conservator and the trustee are the same person, then arguably the court may find that the persons identified in Probate Code Section 15800(b)(2) through (4) may be the parties entitled to an accounting.
Because a trustee’s duty to account is an important duty to both the trustee and the beneficiaries, it is important to address the question of who is entitled to an accounting from the start of the trustee’s appointment. If it is not clear to the trustee, then an attorney should be consulted.