When an individual passes away, an executor is appointed to take care of their estate as per the deceased’s wishes. This person is sometimes also referred to as the personal representative of the estate. As part of that person’s role, one of the main jobs is to distribute the assets to the beneficiaries named in the deceased’s will. In many cases, the beneficiaries want to see the accounting of the estate to check that the executor is dividing it fairly with the best interests of the lost relative or friend. This leaves people asking the question: Do executors have to give an accounting to beneficiaries?
In the US legal system, giving an accounting is not an obligation unless requested by the beneficiaries. Whether you are an executor who has been asked to share accounting information or a beneficiary who has requested to see it, we will answer your questions here in this article.
What Does an Executor Have To Disclose to Beneficiaries?
The executor is in charge of looking after and dividing the deceased’s assets. However, beneficiaries have certain beneficiary rights and should have enough information about the assets and the estate to enforce those rights. Consequently, while the executor is not required to share every piece of information and all decisions with the beneficiaries, there are certain pieces of information that an executor must disclose, including:
- An initial inventory of the estate of the deceased
- The value of the assets at the time of death
- Any change to the value of the assets over time
- Which assets have left and entered the estate
- State and federal taxes and liabilities paid
Providing information on accounting to beneficiaries is not required. However, if a beneficiary requests accounting from the executor, the executor must disclose this information. Therefore, while it is not an automatic obligation to share accounting initially, it might be a legal requirement later.
What Types of Accounting Can Beneficiaries Request from the Executor?
Beneficiaries may request an accounting report at any time in the administration process. However, to reduce the frequency of accountings, they usually wait until the end of the process when a final settlement is reached. The report must contain information on the value of the estate and summaries and explanations of all transactions. The executor may share one of the following two types of accounting:
- Informal accounting
- Judicial accounting
Informal accounting is the typical first step, as it is the fastest and least expensive option for the executor to provide accounting to beneficiaries. Instead of going through the courts, the executor can provide informal accounting directly to the beneficiaries. All the beneficiaries will receive a copy of the report and a release and refund agreement. This agreement serves as legal proof that the beneficiaries have received the information and are satisfied with the release of the property and assets they are entitled to. Once all beneficiaries have notarized the document, the executor can release the funds.
If, however, the beneficiaries are unhappy with the accounting report provided, they can object to signing the release form. When beneficiaries refuse to sign the form, the executor must provide judicial accounting to the beneficiaries. Also referred to as formal accounting, this accounting must go through probate court and is thereby more expensive and can extend the settlement process. For this reason, most transactions won’t reach this stage. Unless a substantial amount of information is being withheld, the majority of beneficiaries will sign the informal accounting report so their share of the estate can be released sooner. This type of accounting is, however, a requirement for supervised estates, when the beneficiaries are charities, or when the estate is insolvent.
The judge will approve the accounting report provided by the executor, and a final settlement can be agreed and the estate divided. In cases where the court discovers that the executor has provided incomplete accounting to beneficiaries, the beneficiaries can sue to get the money that they are due. This is why the executor must keep detailed records of all transactions in and out of the estate. If the executor fails to provide this information, a legal battle can result. It could be beneficial to contact a law firm and appoint an estate attorney if requested to provide formal accounting so that you can obtain appropriate legal advice.
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What Can You Do if an Executor Refuses To Show Accounting?
If the executor refuses to show accounting to beneficiaries after receiving a request to do so, the beneficiaries can file a petition with the court for the executor to release a formal accounting report. Although providing accounting information is not initially a legal requirement, the executor will need to provide the information upon request. Not doing so is a breach of their fiduciary duty. For this reason, the executor should always issue the accounting report when asked to do so. If the case can avoid going through the court, the entire administration process can pass much more quickly.
As long as all of the required information is provided, most beneficiaries will not reach out to the court for a formal accounting. Below is a list of everything that the informal accounting report should contain:
- A list of all assets that are in the estate and their values
- Funds that have already been given to beneficiaries
- Funds that are yet to be distributed to the beneficiaries
- All income and expenses of the estate
Other information that the beneficiaries have the right to request includes:
- Bank statements
- Tax returns
- Closing statements
- Other financial documentation
Again, if the executor refuses to provide any of this information on request, the requesting beneficiary can request a formal accounting via court order. The cooperation of the executor and the beneficiaries is crucial for a smooth transaction.
To summarize, the executor does not automatically have to disclose accounting to beneficiaries. However, if the beneficiaries request this information from the executor, it is the executor’s responsibility to provide it. In most cases, the executor will provide informal accounting to the beneficiaries. If the beneficiaries are satisfied, the executor can release their funds and settle. However, when the beneficiaries are not happy or when the executor refuses to provide informal accounting information, the beneficiaries can request a formal accounting via court order. We recommend contacting a law firm if the case does go to court to seek help in navigating the process.