The executor accounting to beneficiaries is a critical part of the executor's duties—and it must be done properly. It takes place after all expenses and debts have been paid, including income taxes, and before the remainder of the estate is distributed. The executor must give the accounting to all the residual beneficiaries and they must approve it before distribution takes place.
(Note: the term “personal representative” is the current legal term used to refer to an executor/executrix, administrator/administratix, and judicial trustee.)
It is the executor's legal duty to be ready to provide accounts at any time. The duty of account is owed to all residuary beneficiaries, the court, and people interested in the estate who get a court order for an accounting. Non-residual beneficiaries who are to receive a specific gift are also entitled to an accounting with respect to the gift.
Executor accounting to beneficiaries is expected to take place regularly. At the minimum, it must take place every two years after the date of death and after the most recent accounting. The court has the ability to change the length of reporting intervals.
Executor Statement of Account: Example of What's Required
The executor statement of account should include:
- List of all debts and assets submitted with the application for probate
- List of every cent that went out of and came into the estate, including the date
- Reconciliation of current amount in bank account with everything that went out of and came into the estate
- Amount the executor needs to be repaid for expenses and the amount the executor wants to be paid for a fee, as well as how the executor determined the fee
- How the estate is to be distributed, including beneficiaries' names, share of estate, and amount of money each is to receive
- Release form for the beneficiaries to sign, which will release the executor from personal liability for all actions taken
Formal and Informal Executor Accounting to Beneficiaries
The Surrogate Rules give a formal accounting procedure that includes financial statements. Those entitled to executor accounting can sign a release that dispenses with the requirement for a formal accounting.
If all the beneficiaries sign the release and there are no issues with compensation, a formal accounting is not required. This is referred to as informal accounting. The releases should be filed with the court so they are on the record to protect the executor.
If the executor cannot get everyone to sign the release, if compensation needs to be set, or if the executor needs to discharge a bond, he or she can request another form of accounting that is less work and costs the estate less.
Format for Accounting to Beneficiaries
There is no set format for accounting, be it formal or informal. However, it is critical that executors keep detailed records and evidence supporting each transaction.
Additionally, it is in the personal representative's best interest to keep track of how much time is spent for each step, be able to provide evidence of each step taken, and describe instances where he or she has had to use personal discretion. Keeping such information will be useful if the executor's fee is contested.
After Accounting and Distribution
Once the final accounting has taken place and the estate has been distributed, the court can discharge the executor. However, the executor will always be the executor of that particular estate so if issues arise in future he or she will need to take up the role again. Discharge means that the executor cannot be held personally liable for how the estate was administered, unless fraud or undisclosed acts are discovered in the future.