Trust Accounting

Hi, Raina.

My guess is that this is way over Quicken's head.

My CPA practice included a lot of estate and trust accounting, but that was in the 1960s to 1980s, long before I ever used Quicken for the first time in

1990, so I have no actual experience with trusts and Quicken. I've used Quicken only for my own personal finances as a retiree.

Quicken started as a simple checkbook program. Then other capabilities were "tacked on". But it never was intended as a full accounting system. So there are no "capital" accounts at all. With enough ingenuity and effort, it probably could be made to work, but it would depend largely on just how simple your complex trust is. I have heard of several trust accounting programs, but I have not used any of them.

As you know, a "complex trust" can be as simple as one that is not required to pay out all its income currently. If all the income is, in fact, paid currently, then Quicken's checkbook approach might be able to handle the routine cash transactions. But if the trustee must allocate receipts and assets between what belongs to income beneficiaries and what must be held for remaindermen, then worksheets will be required outside Quicken for those allocations. And if income is not distributed currently, further calculations will be needed outside Quicken. Quicken can work well as the checkbook, but not as the full accounting system.

Another major point is one that I've made here several times over the years: accountability, including auditability. Quicken's ease of use is due largely to its ease of misuse. :>( There are NO 'internal controls", as are required by accounting principles. Any entry can be changed at any time for any reason by anybody with access to the program. This is no problem for me, keeping my own books for my own uses. This is what I call "first-person accounting", and Quicken works well for that. It also is seldom a problem for "second-party accounting", such as my keeping the family books for my wife and myself and our son. Or for a family partnership consisting of only persons who would naturally rely on me in any case.

But Quicken is not appropriate for "third-party accounting", where results must be relied on by outside parties, such as lenders, investors, a court - or beneficiaries who do not naturally rely on me. So if there is any chance that a conflict might arise during - or after - the life of the trust, then you probably will need a program with more internal controls built in.

The full answer depends on facts which you haven't told us - and which you probably to not want to share in a public newsgroup. Perhaps your own CPA can advise you as to an appropriate accounting tool for your fiduciary duties as a trustee. I have been retired for about 20 years now, and have not kept up with the current state of such tools.

-- R. C. White, CPA San Marcos, TX (Retired. No longer licensed to practice public accounting.) snipped-for-privacy@grandecom.net Microsoft Windows MVP (2002-2010) (Using Quicken Deluxe 2011 R 8 and Windows Live Mail in Win7 x64)

Is there some way to differentiate income and principal allocations in Quicken; and a way to keep track of different beneficiary's shares? This is a complex trust; I am trustee.

Thanks.