Estate Accounts

Before an estate administration can be finalised, the terms of final distribution must be approved by both executors or administrators and beneficiaries. Sometimes, in very straightforward estate administrations, where perhaps the executor is also the sole beneficiary, this can be done very informally. However, where there are multiple beneficiaries, where the terms of distribution are complicated or perhaps where the beneficiaries are mistrusting of the executors or administrations, the executors or administrators can be required (or may even choose to) provide estate accounts to show how the proposed distribution figures have been arrived at.

What is estate accounting?

Estate accounts are a record of values and transactions relevant to the estate administration, showing all movements of funds from date of death to final distribution. Accounts should be made available to beneficiaries on request during the administration in interim form and then at the end of the process before final distributions are made.

Unless instructed otherwise (by all parties), professional trustees will virtually always prepare estate accounts. It helps show transparency over the funds they have received and ensures the beneficiaries have full disclosure prior to confirming their acceptance of the final distribution in full and final settlement of their interests in the estate.

What should be included in estate accounts?

Estate accounts should include a comprehensive record of all financial transactions and activities related to the administration of a deceased person’s estate. They provide a clear overview of how the estate’s assets were managed, debts were settled, expenses were paid and funds were distributed.

This should include the following:

• Opening balance: The initial balance of the estate account when it was established which includes all the assets transferred into the account.
• Income received: Record all sources of income generated by the estate such as interest, dividends, rental income or any other revenue received during the estate administration period.
• Payments of debts and expenses: Document all payments made from the estate account to settle debts and expenses. This includes funeral costs, outstanding bills, taxes, legal fees, administrative expenses and any other financial obligations associated with the estate administration.
• Professional fees: If professionals, such as solicitors or accountants, were involved in the estate administration, record their fees and any other professional expenses incurred.
• Asset sales: If any assets were sold during the estate administration process, note the details of the sale, including the sale price, any associated costs and the net proceeds received.
• Distributions to beneficiaries: Outline the distributions made from the estate account to beneficiaries. Specify the amounts disbursed to each beneficiary and the method of distribution (e.g. cash, specific assets or percentages).
• Taxes and inheritance tax: Include any taxes paid from the estate account such as income tax, capital gains tax and inheritance tax. Provide supporting documentation and calculations related to these tax payments.
• Reserves and adjustments: Account for any reserves set aside for potential future expenses, contingencies or claims against the estate. Make any necessary adjustments to reflect changes in the estate’s financial position.
• Closing balance: Summarise the final balance of the estate account after all transactions, distributions, expenses and adjustments have been accounted for.
• Supporting documentation: Maintain organised and thorough documentation to support all financial transactions recorded in the estate accounts. This includes bank statements, receipts, invoices, legal documents, tax records and any other relevant paperwork.

It is crucial to maintain accurate and detailed records when preparing estate accounts to ensure transparency, facilitate auditing if required and demonstrate proper administration of the estate.

Just because you have administered Probate yourselves does not mean you cannot approach a professional to prepare final accounts for you.

Why choose Price Slater Gawne?

The experienced team at Price Slater Gawne works closely with families who require our expert advice and guidance. Our specialist team is experienced in many different aspects of Probate and preparing estate accounts. If you would like to speak to a member of our team, please contact 03333 058375 or email WealthProtection@psg-law.co.uk.