Executor Dictionary A-Z

I am starting a new executor (“estate trustees” in Ontario) dictionary. I am starting with this word: accounts.

Accounts – What happened to the estate’s money?

Accounts contain a record of an executor’s financial dealings for the estate. Accounts or an accounting are the executor’s statements or reports to estate beneficiaries on their financial dealings.

As an executor, you must keep up-to-date records of all your financial transactions. You may be required to produce your records for inspection at any time.

Accounts normally include an original inventory of the estate assets and liabilities.

One day you will need your accounts in order to close the estate. This happens when you make a final report to beneficiaries. They can ask questions about your dealings with estate property. How and when you produce your accounts will depend on a number of factors.

Estate Beneficiaries Have Rights?

Beneficiaries of an estate can ask to inspect your accounting records, vouchers and receipts. If beneficiaries are not satisfied with your accounting, they have rights to:

1. ask you to revise your accounts before they approve them
2. reject your claims for executor compensation
3. seek to have the court remove you from office for breach of duties
4. ask for a formal passing of your accounts by an estate court audit
5. charge you for all their legal fees

Keep Proper Records

Your final accounting as executor must be approved when the estate is to be closed. This is key when it comes time to receive your compensation.

Your records may not need to be very complicated. Keeping track of your income and expenses will also help prepare income tax returns.

Estate money cannot be mixed with anyone else’s. Record the date for each item and everything you do that affects estate money or beneficiaries. For example:

• income received and its source (investments, rent, dividends, salary, pension)
• sale of assets, including property, stocks, car or house
• money paid for expenses (repairs to house, funeral costs, credit cards or loans, support  to dependants or spouse)
• tax payments (probate, income taxes, inheritance taxes if any)
• professional service fees (appraisals, accountant and lawyer fees)

In complex estates, consider hiring a bookkeeper to keep those records. You can produce them when needed for court approval. Your lawyer can tell you how detailed your records must be.

Executor Tips:

• Keep estate funds separate for all financial transactions
• Do keep records as you go along (not just when you finish)
• Beneficiaries can call upon you at any time to account

Executors are fiduciaries (persons in positions on trust). The law holds executors accountable when you deal with someone else’s property.  Whatever you do, keep back-up copies in case your computer or paper records disappear.

Next up, “beneficiaries”.