Estate accounting

What it means

An accounting shows the opening inventory, receipts, disbursements, gains and losses, fees taken, and what remains to distribute.

It is normally required before a personal representative is discharged. Beneficiaries may be able to approve it by consent, which avoids a hearing.

Interim accountings may also be required where an estate stays open for a long time.

Why it matters

It is the document that ends an executor's liability. Approval — by the court, or by everybody entitled to object — is what closes the door.

It is also why receipts matter from day one. Reconstructing a year of transactions at the end is far harder than recording them as they happen.

When you are likely to meet it

• When closing an estate.
• When a beneficiary asks where the money went.
• When a court sets a deadline for a final account.

How this varies by state

Whether a formal accounting must be filed, and whether beneficiaries can waive it, are set by state law.

Related terms

• AbatementThe order in which gifts in a will are reduced when the estate cannot pay for everything.
• AdvancementA gift made during life that counts against what that person inherits at death.
• Bill of saleA written record that ownership of something passed from one person to another, with the date, the parties and the price.
• Bona fide purchaserSomebody who buys property for value, in good faith, without notice of anyone else's claim to it. The law usually protects them, even against the rightful owner.
• Compelled accountA court order that makes a fiduciary produce the books, obtained by somebody with an interest in the estate.
• ConservatorshipA court appointing somebody to manage the money and property of an adult who cannot manage it themselves.
• DissociationA partner ceasing to be a partner — by death, by incapacity, or by leaving — without the partnership ending.
• Estate accountA bank account in the estate's own name. Estate money must not pass through anybody's personal account.
• Estate saleA sale of the contents of a house, usually run by a company on commission. It is one of several ways to clear a home, and rarely the only one worth considering.
• ExecutorThe person named in a will to carry it out — once a court actually appoints them.
• Executor compensationAn executor may generally be paid for the work. The payment is taxable income; an inheritance usually is not.
• Extraordinary servicesWork by an executor or estate lawyer beyond routine administration, paid for on top of the ordinary fee.
• FiduciaryAnybody who holds power over somebody else's money or decisions and is legally required to use it for them rather than for themselves.
• Fiduciary dutyThe obligation to act for somebody else's benefit rather than your own — and to be able to show you did.
• Formal administrationProbate supervised by a judge, with petitions, notice and hearings. It is the default in some states and the fallback everywhere.
• Guardian ad litemSomebody the court appoints to speak for an interest that cannot speak for itself in one case.
• Interested personAnybody the law says has a stake in an estate — an heir, a beneficiary, a creditor, sometimes a fiduciary. It decides who gets told and who may object.
• Inventory and appraisementA list of everything in the estate with a value against each item, filed with the court or given to the beneficiaries.
• Legal and equitable titleOwnership split in two: one person holds the property, another holds the benefit of it.
• Notice to creditorsA formal announcement that an estate has been opened, which starts the clock on how long anyone owed money has to say so.
• Personal representativeThe neutral term for whoever is authorized to act for an estate, whether named in a will or appointed by a court.
• Petition for dischargeThe filing that asks a court to release the executor and close the estate — and that starts your deadline to object.
• Priority of claimsThe statutory order in which an estate's debts are paid. Paying out of order is the executor's own liability.
• Refunding bondA beneficiary's written promise to give part of their share back if the estate turns out to need it.
• Residuary estateWhatever is left after specific gifts, debts, taxes and expenses have been dealt with. Most wills give it away in a single clause.
• SurchargeA court order that an executor personally repay the estate for a loss their own breach of duty caused.
• TrusteeThe person or institution that holds and manages trust property for the people it is meant to benefit.
• Waiver of accountingA signed document giving up your right to a formal account of what the executor did with the estate.

Sahvelo guidance that uses this

• Final accounting
• Being an executor