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What Is a Estate Accounting? Definition, Uses and Importance.

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An act or system of settling accounts; it’s a statement that summarizes an entire estate looking at credits, debits, and liabilities from real estate to investment accounts. An inventory of assets is different from an estate accounting which can be requested at any point in time by any of the named beneficiaries but it is standard to do a basic inventory of assets within the first few months of a probate proceeding.

Estate accounting involves showing the transactions paid to and from a deceased estate. Bank statements, bank books, and other records must be reviewed and combined chronologically. This can take a considerable amount of time and effort.

Difference between an estate accounting an inventory of assets

An inventory is filed after the personal representative, executor, or administrator is appointed. The inventory of assets states the assets and debts of the decedent which is different than an accounting. An accounting is filed when the personal representative is ready to close the estate. The accounting shows how the assets of the decedent were spent and/or distributed during the probate proceeding. The accounting will include payments made to any creditors.

Executors Roll In Estate Accounting

As an executor or administrator of an estate, you are saddled with the responsibility of overseeing all decedent’s properties and ensuring their last wishes concerning inheritance distribution are well obeyed. All of a decedent’s assets and liabilities at the time of death make up the estate. Estate administration differs from trust administration as the former is associated with distributing the assets which is a short-term process while the latter is more of a long-term process as it involves maintenance and management of funds over longer periods.

Both require accountability from the executor or administrator to provide information about the estate’s account. The estate accounting is a document that gives an account of the amount of property left by the decedent at the time of death, expenditure from the estate’s account since the decedent’s death, how the funds were managed, and other assets that have been acquired by the estate after the decedent’s death. The document also contains information about assets left at the time of preparing the estate accounting and how the remaining assets will be distributed among the inheritors.

Is there always a formal accounting of the estate?

No, there is not always an accounting report but beneficiaries can request an accounting report when the estate is coming to an end and a final settlement/distribution is required. Whether the beneficiaries of the estate request an accounting will depend on the other beneficiaries and the relationship they have with the executor or trustee. Many beneficiaries will request an accounting when they want to make sure that not funds were used irresponsibly or irrespective of their wishes. Probate accounting is a timely process and can be expensive.

What is considered an estate expense in probate accounting?

Most expenses that a fiduciary incurs in the administration of the estate or trust are properly payable from the decedent’s assets. These include funeral expenses, appraisal fees, attorney’s and accountant’s fees, and insurance premiums.

Does an executor have to show beneficiaries an accounting?

An executor of an estate does not have an automatic obligation to file an accounting of the estate unless specifically requested from a beneficiary.

When Is An Estate Accounting Not Necessary?

An estate accounting can be waived if all beneficiaries of the estate sign a written waiver or a document attesting that they have been given their share of the estate.
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