As the executor or administrator of an estate, you’re beginning to acquaint yourself with the requirements of your role. What are your duties? Do you get paid? What decisions do you have authority to make? Do you need to be prepared to show an accounting to the beneficiaries?
Serving as executor is a big responsibility, and it involves a significant amount of record-keeping. You’ll need to show the probate court and the beneficiaries that you’ve administered the estate in full compliance with the law and your fiduciary duties.
So does that compliance require showing an accounting to beneficiaries?
The short answer is yes, you have to show an accounting unless the heirs or beneficiaries of the estate waive the requirement. And even if they waive it, probate best practice is to show a thorough summary of what was done so you reduce the chance of disputes later on.
Of course, the details of an accounting can be more complicated, so let’s jump in! In this guide, we’ll cover:
Probate and executor duties
Probate inventory vs. probate accounting
Executor accounting: what’s included?
Receipts and releases for executor accounting
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Probate and executor duties
You have a lot on your plate right now. You may be feeling overwhelmed. You may still be grieving the loss of a loved one. Getting a request for an accounting may feel like one too many things to manage, which is understandable. The probate process can definitely take its toll.
But it’s important to remember that as an executor, you have a fiduciary duty to the beneficiaries. You are administering the estate on their behalf. Hopefully you’ve been keeping good records — it’s one of the most important parts of your role as an executor — so providing an accounting won’t actually be that difficult.
And here’s why it’s important for beneficiaries: every transaction made by the estate has the potential to impact their inheritance. If they get some portion of what’s left after the payment of debts and expenses, they’ll want to know what those debts and expenses were and how they were handled. They have a right to see and understand those transactions.
Each state creates its own rules about the probate process, including when and what type of accounting is required. Some states require the Executor to submit an estate accounting to the probate court. Some states require the executor to provide the accounting to beneficiaries, notifying the court of compliance with that rule. Regardless of the state’s specific rules, the expectation in most probate cases is that the Executor will provide an informal accounting to beneficiaries any time they request one.
Probate inventory vs. probate accounting
Early in the probate process, an executor is required to provide the probate court with an inventory of the estate’s assets. This inventory lists every asset in the estate as well as its estimated value. That means it includes property (like houses, cars, and jewelry) as well as bank accounts, retirement or investment accounts, and stocks and bonds. A probate inventory may also list any debts owed by the estate.
Probate courts generally have a standard inventory form you can fill out. If the estate has more assets than you can fit on the form, you can attach additional pages using the same format.
The probate inventory is not the same as the probate accounting. You must provide the inventory to the court at the beginning of the probate process, and it includes only the assets (and, for some states, debts) of the estate at that time. Compare that with the accounting, which includes not only an inventory of the existing assets and debts but all the transactions that occur during the probate process as well.
Executor accounting: what’s included?
The estate accounting you must provide as an Executor may be an extremely detailed document, depending on the size and complexity of the estate.
It details every transaction that occurred during the executor’s administration of the estate as well as all the estate’s assets. Before the executor can finalize probate and close the estate, they must provide a final accounting that includes:
An itemized list of the estate’s assets
Any funds or property received by the estate during its administration
All expenses paid by the estate, including payment to the Executor, funeral expenses, taxes, debts, etc.
Any distributions to beneficiaries, already made and planned
Beneficiaries have the right to review the accounting. They also have the right to request more information. If they want to see supporting documentation, the executor must provide things like:
Receipts
Tax returns
Account statements
Closing statements
Copies of checks
Again, depending on the complexity of the estate, the supporting documentation could be small or could be many files.
Receipts and releases for executor accounting
In most probate cases, the Executor will prepare an informal accounting for the beneficiaries. Along with the informal accounting (which could be as simple as an Excel spreadsheet), the Executor may include a receipt and release document.
The beneficiaries will review the accounting and then sign the receipt and release, confirming that they’ve received the accounting and releasing the executor from any future liability with regard to the estate. Be aware, however, that not every state allows an Executor to condition a beneficiary’s receipt of an accounting or property on signing such a release.
If the beneficiaries object to the accounting, they can petition the court for additional information. The court may hold a hearing to determine whether there has been fraudulent activity or mismanagement of estate assets.
The most important thing for you to remember as an executor is to keep thorough and accurate records. Detailed record-keeping can help you avoid questions about your actions during the administration of the estate and will make providing an accounting to beneficiaries relatively straightforward. Do you have an estate plan of your own set up? Here at Trust & Will, we’re here to help you keep the process simple. You can create a fully customizable, state-specific Estate Plan from the comfort of your own home in just 20 minutes. Take our free quiz to see where you should get started, or compare our different estate planning options today!
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