I have a confession: I hate double-entry accounting. I find reading double-entry accounting statements confusing. Getting through them is frustrating and annoying. Fortunately, in estate and trust law I rarely need to review this type of accounting statement.

Fiduciary accounts, however, I am comfortable with. For those of you not familiar with them, fiduciary accounts are produced for executors, trustees, attorneys for property or guardians and are produced pursuant to a unique set of legal and accounting rules. I understand from several accountants and bookkeepers I have spoken to over the years to that they find reviewing and producing these types of accounts as difficult as I find double-entry accounting.

The basic requirements for fiduciary accounts when they are to be submitted to Court for a passing of accounts are set out in the Rules of Civil Procedure. At its simplest level, fiduciary accounting requires a chronological listing of all receipts and disbursements of the estate, trust or property in question. A separate listing for investments is provided, as well as a statement calculating the fiduciary's compensation claim, if any. Accounts are balanced at the end of each period by comparing the net receipts and disbursements to the assets on hand.

However, this simple overview does not cover the complexity of many fiduciary accounts. For example, if an estate or trust has different capital and income beneficiaries, separate accounts for capital receipts and disbursements and for income receipts and disbursements are necessary.

Further, there are also both rules that have been determined by decided court cases as well as conventions for properly producing fiduciary accounts. For example, when real property with an existing mortgage from a financial institution is sold, the proper way to account for the proceeds is not to include the full sale price as a receipt and the payment of the remaining mortgage as a disbursement. Instead, the net sale price, less the mortgage repayment and any other amounts paid directly from the sale proceeds by the lawyer acting on the sale, is recorded as a receipt, with details of the calculation of the net amount provided.

Even within a given profession, there are levels and areas of expertise. As one becomes more experienced, one learns not only new levels and areas of one's profession but also which areas and levels one is not as adept at, and who to call in when those matters come up for a client. In the worlds of accounting and estate and trust law, fiduciary accounts are one of those areas.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.