Tricks and Tips for Balancing Probate Accountings

Personal Representative Duties & Responsibilities

During a probate administration, there are several key duties and responsibilities of a Personal Representative when it comes to the assets comprising the Decedent’s estate. Basically, the Personal Representative:

• winds up the Decedent’s affairs;
• collects and secures the assets;
• pays the debts, expenses, and taxes of the Decedent; and
• distributes the balance of an estate to the respective beneficiaries.

The process of collecting and securing assets and paying the expenses for an estate administration is reflected on an Inventory and on a Final Account, which are filed with the probate court.

A Personal Representative has a duty of loyalty to the estate of the Decedent and must act with good faith and in the estate’s best interest.

Crunching Numbers in Probate

An Inventory is a summary of the probate assets of a Decedent and reports the date of death valuation of each asset. A probate asset is one held by the Decedent individually, with no beneficiary, or co-owner with rights of survivorship designated, such as bank accounts, vehicles, real and personal property, etc.

The date of death valuation is typically the fair market value of the assets at the date of death. The Inventory includes any encumbrance to the asset, such as a mortgage on real property (i.e., homestead or cabin).

A Final Account is a complete record detailing the assets, receipts, and disbursements made during a probate administration. It is comparable to a balance sheet, as the Final Account reports all the “ins and outs” for the estate, starting with the beginning value of the Inventory and ending with the value of the property on hand for distribution to the beneficiaries. The key to balancing a Final Account is this: good record-keeping and meticulous attention to detail.

The purpose of an Inventory and Final Account is to protect the Personal Representative from contested issues or liabilities down the road. Providing full transparency of every transaction taken with respect to the Decedent’s estate fulfills the ethical and fiduciary role placed upon a Personal Representative.

Balancing a Final Account

The detail of including all the ins-and-outs on a probate accounting must balance, to the penny, with the personal property on hand for final distribution. In most cases, if there is a discrepancy in attempting to balance a probate accounting, you will want to ensure all entries are accurate as shown and reflected on the estate account statements and receipts.

The main culprits for an unbalanced account often tie to advances paid during the administration and the accurate reporting of capital gains and/or losses on investment assets. It is important to ensure that all the values reported on the Inventory are properly reflected on the accounting. If there are any omitted assets that were not reported on the Inventory, then reporting them under the “Debits” column (Increases) of the probate accounting is proper.

The “Credits” Column (Decreases) of the probate accounting is where all the expenses are reported, including expenses of administration, legal fees, taxes, accounting, last illness, funeral, claims paid, advances paid, etc.

How Our Probate Attorneys Can Help

Resolving the balancing issues are part of the fiduciary role and a duty of a Personal Representative of an estate. With the assistance of our experienced probate attorneys and paralegals at Kennedy & Ruhsam Law Offices, P.A., the probate accounting is the gem that shines, showing the transparency of the estate administration process for the court and for the beneficiaries of the estate.