Fiduciary Duties

Whether someone is appointed as a guardian of a protected person’s property (previously known as “ward”), or appointed as a personal representative of a probate estate, or as a trustee of a trust, all are commonly referred to as a ‘fiduciary.” A fiduciary possesses a duty to lookout for the best interests of an individual (like a protected person in a guardianship), or a group of individuals (like heirs/devisees in a probate or beneficiaries in a trust). Failure to provide a timely and proper accounting results in being removed. Also if a fiduciary does not understand the requirements of the Nevada Revised Statutes and the applicable will or trust, and s/he fails to  timely provide an informative accounting, s/he will personally pay the legal fees of the party bringing the claim.

Each fiduciary has unique reporting requirements that differs from the average business accounting. Most notably none of the requirements under the Nevada Revised Statutes (NRS) and none of the local rules of the District Courts follow Generally Accepted Accounting Principles aka GAAP. In Nevada fiduciary accountings are a world of their own.

Carryout one of the most important duties of a fiduciary – Keep Interested Persons Informed and reduce litigation.

Whether you are administering a probate estate, trust, or a guardianship, an often overlooked duty is keeping interested persons (heirs, devisees, beneficiaries and the courts) informed of the progress of administration and what will be distributed. Think about it, this duty is important! If you were a beneficiary of a trust, you likely would want to know how much you are inheriting and when you will receive your distribution. You will also want to know if the fiduciary (personal representative, trustee, guardian) is protecting property you will inherit, whether funds are spent wisely, and to ensure that everyone gets their fair share.

Our Fiduciary Accountings have the weight of authority to stand challenges.

Our fiduciary accountings follow direction in the applicable governing document (i.e… trust or last will and testament) and the Nevada Uniform Trustees’ Accounting and Uniform Principal and Income Acts. We also apply widely accepted accounting principles to fill in the gaps where governing documents and existing laws are lacking. Our accountings trace from fiduciary reporting to interested parties and courts to filed fiduciary income tax returns.

Examples of Nevada fiduciary accountings:

Guardianships

While the NRS requires an accounting be provided annually; they do not specify the format and content. Each of 11 Judicial District Courts in Nevada can and do require financial reporting to be presented in a certain format suited to each District. Many frequently change reporting requirements. Thus, a report in the Eight Judicial District (Clark County) may vary from year to year, where in the Second (Washoe County) requirements may stay the same. We are sensitive to each Judicial District requirements and ensure reports are timely and properly prepared for submission.

Probates

Like in guardianships, the NRS require an accounting be provided annually, and they too do not specify the format and content. Some Judicial Districts require strict formats, while others like the Eight Judicial District are very lax. Where a Judicial District is lax in reporting requirements, we have created a format to keep heirs/devisees informed of the financial status of the Estate. We have found keeping heirs/devisees informed reduces probate and litigation fees and costs. Regardless of how lax reporting requirements are, the Internal Revenue Service still requires amounts to be classified and reported on the Form 1041. So preparing a financial report to the heirs/devisees does not add much cost in accounting fees, and goes a long way of keeping much higher legal fees down.

Trust Administrations

Like guardianships and probates, the NRS requires an accounting be provided annually. But unlike guardianships and probates, a strict format is specified in the NRS to report financial transactions. That is just the beginning. How to get to the reporting requirements, one needs to understand the requirements of the NRS Principal and Income Act and the language of the applicable trust.  That is how our fiduciary accounting  experience comes in. Few CPAs and lawyers in Nevada understand the ins-and-outs of the Uniform Principal and Income Act.

The Nevada Revised Statutes Have One Big Flaw That Causes Accountings to Fail

Of all the requirements in the Nevada Revised Statutes and various District Court rules, none require a reconciliation of a heir’s/devisee’s/beneficiary’s share in a probate or trust administration. Of the information most important to an heir/devisee/beneficiary is understanding what each will inherit. People when they do not know what they will receive, usually get impatient or begin to cook-up conspiracy theories that the fiduciary is somehow stealing.  We at Crest Key provide in all our probate and trust accountings an statement detailing all transactions affecting each heir/devisee/beneficiary share.

Reveal tax deductions when accurate records are maintained.

Over the years we have prepared many US Federal Fiduciary Tax Returns, Form 1041. When we have taken over the preparation of fiduciary taxes, we have discovered an interesting, but easily solved repeated error – tax preparers do not take tax deductions that are readily available. The affect is trusts and estates are incurring federal taxes that ought not be paid.

Crest Key – Your First Legal, Acounting and Business Advisor

Helping our clients to fullfill their fiduciary duties

Once you become a client, we spend time with you to understand your fiduciary needs. As such, we share useful techniques you can confidently implement when gathering relevant and useful information toward presenting useful financial reports. Additionally, there are times while discussing financial matters when legal questions arise. In such cases, we can directly connect you to a legal professional of Crest Key. Our accounting and legal professionals demonstrate our holistic approach to assisting you in carrying out your fiduciary duties to keep all applicable persons informed.

Tax Planning and Preparation Object
IRS inquiry and audit defense; representation in US tax Court

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