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For trusts and estates

An Australian fiduciary accounting engagement letter for trustees

In a fiduciary engagement the person who instructs you, the person who pays you and the people affected by your work are frequently three different sets of people.

That is the whole difficulty. A trustee engages you; the beneficiaries receive the accounting; the estate pays the fee. Somebody in that triangle may later object to what you produced, and the letter is where you settle who your client is before anybody has a reason to argue about it.

Last reviewed against 3 primary sources.

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Fiduciary accounting engagement letter

The full letter in Word and PDF, written for Australia, covering the trustee relationship, the accounting period and court formats.

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The format matters too. A fiduciary accounting prepared for a court has a prescribed form that has nothing to do with the financial statements a firm produces every other week of the year.

What a fiduciary engagement must be clear about

  1. 1

    The client is the fiduciary, not the beneficiaries

    Say it in the first paragraph. You act for the trustee, executor or administrator in that capacity. You do not act for beneficiaries, you owe them no duty of care, and they are not entitled to instruct you.

  2. 2

    The period, and the opening balances

    The accounting period, the opening position, and where that opening position came from. Carrying forward figures nobody can support is how a fiduciary accounting fails.

  3. 3

    The format and who it is for

    Court format, informal accounting for beneficiaries, or both. They are different documents, and a court form has requirements a firm's standard output does not meet.

  4. 4

    What you are not concluding

    Not an audit. No opinion on whether the fiduciary acted properly, on the validity of the instrument, or on the beneficiaries' entitlements.

The fiduciary accounting engagement letter

Written for Australia. The downloads are the same text, as a Word document to edit and a PDF to put on your letterhead.

[Firm letterhead]

[Date]

[Trustee / Executor name], as [trustee / executor] of [the estate or trust]
[Address]

Dear [Contact],

Who we act for

We are engaged by [name] solely in their capacity as [trustee / executor / administrator] of [the estate or trust]. Our client is the fiduciary in that capacity. We do not act for, and owe no duty to, any beneficiary, creditor or other party, none of whom may instruct us.

The engagement

We will prepare a fiduciary accounting for [the estate or trust] for the period [date] to [date], in [the format prescribed by [court] / an informal format for distribution to beneficiaries], from the records and information you provide.

The accounting will present receipts, disbursements, distributions and the assets on hand, with the capital and income allocations required by [the governing instrument and applicable law].

Opening position

Our accounting begins with the assets and values as at [date], taken from [source]. We have not verified that opening position and express no view on transactions before that date, unless the scope says otherwise.

What this engagement is not

This is not an audit, a review or a compilation of financial statements, and we express no assurance. We reach no conclusion about whether the fiduciary has properly discharged their duties, about the validity or interpretation of the governing instrument, about the entitlements of any beneficiary, or about the tax consequences of any transaction unless separately engaged to do so.

Your responsibilities

You are responsible for the completeness and accuracy of the records, for the decisions taken in administering [the estate or trust], for the valuations used, and for the accounting once it is filed or distributed. You will provide [statements, vouchers, appraisals, the instrument, prior accountings] by [date].

Fees

Our fee is [amount / rates] in Australian dollars, invoiced [when] and payable within [number] days by [the estate or trust]. Where a court must approve fees, our engagement is subject to that approval and you remain responsible for fees to the extent not approved. Time spent responding to a beneficiary objection or attending a hearing is charged separately at [rate].

Confidentiality and retention

We keep the engagement confidential except where the law, a court or our professional body requires disclosure. We hold information in accordance with the Privacy Act 1988 and retain our file for [number] years.

Agreement

Please sign and return a copy in your fiduciary capacity.

[Name], [Firm name]

Agreed by [Trustee / Executor], as fiduciary:

Signature ______________________ Date ____________

Before you use this

Supplied as-is, with no guarantee. These templates are general information, not legal advice, and not a substitute for it. Have your own legal adviser review and adapt one to your practice and your jurisdiction before you put it in front of a client. FirmHello accepts no responsibility or liability for any use made of them.

Trusts and deceased estates in Australia

Here this work usually means acting for the trustee of a family trust or the legal personal representative of a deceased estate. For an estate, the ATO separates the date of death return, from 1 July to the date of death, from the trust returns the estate lodges for the period afterwards.

For an estate's first three income years, a trust return is required if net income exceeds the individual tax-free threshold, a beneficiary is presently entitled, or a beneficiary is not an Australian resident. From year four, any income requires one. Name the years in scope.

Personal liability before distribution

A representative who distributes an estate before its tax is paid may be personally liable, up to the value of estate assets held. The ATO's PCG 2018/4 sets conditions under which simpler estates can be finalised without that risk. Say whether advice on it is included.

Resolutions by 30 June

A trustee resolution decides who is assessed on trust income only if made by 30 June, or earlier where the deed says so. Otherwise the trustee may be assessed, possibly at the top rate. Set a date in the letter for the trustee's instructions.

Streaming needs writing

Making a beneficiary specifically entitled to a franked distribution must be recorded in writing by 30 June, and to a capital gain by 31 August. Agree who drafts the written record and who keeps it.

The whole deed, with amendments

The ATO's resolutions checklist starts with a complete copy of the trust deed and its amendments, and asks whether a family trust election is in force. Make supplying both a client obligation in the letter.

Where fiduciary engagements turn difficult

A beneficiary who believes you act for them

They called you, they asked questions, you answered helpfully. The first paragraph of the letter is what prevents that becoming a claim.

Opening balances taken on trust

Accepting a predecessor's closing position without saying so in writing makes their errors yours.

Fees subject to approval, discovered late

In court-supervised administrations the fee may need approval. Better to write that down at the start than to discover it at the end.

Other engagement letters

What it is Engagement letters Forensic accounting Forensic Accounting Accounting

Questions about fiduciary accountings

Can we act for both the trustee and a beneficiary?

Almost never comfortably, and never without addressing the conflict explicitly. The cleanest position, and the one this template takes, is that you act for the fiduciary alone.

Does a fiduciary accounting follow normal accounting standards?

No. It follows the governing instrument and the applicable law, and in a court-supervised matter the court's prescribed format. It is a different document from financial statements, with different conventions for capital and income.

What if prior accountings were never prepared?

Then the opening position has to be constructed, which is a separate engagement with a separate fee. Say in the letter where your period begins and what you have assumed about everything before it.

Who signs the letter?

The fiduciary, in their fiduciary capacity — not personally, unless they intend to take personal responsibility for the fee. The distinction matters if the estate turns out to be insolvent.

Sources

The primary sources this page is written against, last read against it on . Check them before relying on a detail; rules and thresholds change.

  1. Australian Taxation Office Deceased estates
  2. Australian Taxation Office LPR may be personally liable up to value of estate assets if tax unpaid before finalising
  3. Australian Taxation Office Trustee resolutions effective only if made by 30 June (or earlier per deed)

What changed

  • Added an editable Word (.docx) copy of the letter beside the PDF.
  • Added the section on what Australian law adds, written from primary sources, and reviewed the shared letter text for wording that only US law supports.

The letter is the easy half

Sending it, getting it back signed, and finding it again in two years is the half that eats the week. That is what the portal is for.

No card and no sales call. If you would rather tell us about your firm first, use the longer form.