Last Updated on May 11, 2022 by Fair Punishment Team
A question that you might not know the answer to is: does an executor have to show accounting to beneficiaries? Whether you are a beneficiary or whether you are an executor of an estate, this might be a question that you do not know the answer to. Well, in short, the answer is not voluntarily.
The way this works is that a beneficiary will not have to file an accounting of the estate unless the beneficiaries ask them for accounting. In this case, the executor will have to provide an accounting of the estate. However, if you are a beneficiary who wants to ask for an accounting or even if you are an executor who has been asked to give an accounting, then you will need to get in touch with a lawyer.
What Will A Beneficiary Ask For First?
So, it is true that if a beneficiary and also the executor come to an agreement that they will have an informal accounting documentation happening then this could be effective. However, this is not always effective. It is important that if you are trying to arrange this, then the beneficiary needs to be completely satisfied with this in order for this to work.
When an executor files any kind of informal accounting, they will not have to file it with the court. In this case, the accounting can just be given to the beneficiaries. Also, an executor might even ask a beneficiary to approve an informal accounting prior to the executor making distributions of estate funding.
What If The Beneficiary Is Not Satisfied?
If you are in a situation where the beneficiary is not satisfied with the way that the informal accounting is being completed, then they will be able to ask for a kind of formal accounting. If this is something that the executor ends up failing to provide, then the beneficiaries will be able to compel the executor to provide one.
Alternatively, if the executor is ordered by the court to provide an accounting then they will usually do this, or they will end up facing the consequence of getting removed by court. This will be the case if a kind of incomplete accounting is provided, or even if a fraudulent accounting is provided. It is true that beneficiaries can also sue these accountancies as a challenge against the accountings. This will mean that beneficiaries will be able to get the money that the executor could be keeping from them.
What About The Requirements Of A Valid Estate Accounting?
Let’s talk about what exactly an estate accounting is. So, an estate accounting is a document which details each transaction which has occurred in the estate and this also provides some summaries along with some explanations of these transactions that have taken place.
This document will actually consist of various schedules in a court-approved format and this will mean that you are complying with the general accounting standards. Thinking about this more at a minimum, then the estate accounting will include the schedules that are listing all of the assets which are part of the estate. This will always entail the expenses of the estate, along with all the income of the estate and also the proposed distributions of the estate.
It is important to mention that the accounting is a set of schedules where an executor will be required to divulge all of the possible information referring to the estate. This information can include an itemized list of the assets which are in the estate along with the funds or the property which has been received by the estate. This information will also include the expenses of the estate, and also the beneficiary distributions which are already disbursed. Additionally, the information will also include the beneficiary distributions which are yet to even be disbursed.
What Documentation Are Beneficiaries Entitled To Have The Executor Show Them?
Additionally, beneficiaries and their estate attorney will have the opportunity to revisit their schedules and then they can come to the conclusion as to whether or not they are completely satisfied with the information that has been provided. Alternatively, the beneficiaries will be able to compel the executor to be able to show all of the documents that are associated with the estate as well as the executor’s own personal documentation.
It is important to note that beneficiaries are entitled to have the executor show them documentation that includes the account statements along with the closing statements. Also, the beneficiaries are entitled to having the executor show them copies of checks along with tax returns. Another document which beneficiaries are entitled to see are loan applications too.
What About The Inventory Of The Estate?
It is important to include that beneficiaries will also have the right to have the executor show them an inventory of the estate. However, this is not documentation which should be confused alongside any kind of formal accounting documentation. The inventory of the estate can be requested within nine months of the appointment of the executor of the estate.
An inventory really is something that must just be filed, and the beneficiary should not be in a position where they have to ask for it. In fact, some executors might even make the mistake of simply filing the inventory along to the court. The problem? They will have forgotten to send a copy over to the beneficiaries too. It can be a good pointer to request an inventory from the executor before coming to the decision as to whether or not you are keen to progress on to the next step.
On the whole, if you are unsure as to whether an executor has to show accounting to beneficiaries, then in short, no… Unless the beneficiary is requesting this. It is not something that an executor is necessarily obliged to do as they go along, only if a beneficiary is requesting the accounting then will the executor have to provide this.