Estate and Trust Accountings

 Informal Accounting ("Receipt and Release")

 There are two methods by which an executor or trustee can conclude his service as fiduciary of an estate or trust.  The first and most common method is by an informal account often referred to as a “Receipt and Release” agreement.  The Receipt and Release agreement generally provides basic information about the fiduciary’s administration of the estate.  Receipt and Release agreements have also been known to provide little to no information; this is improper. If as a beneficiary you think the fiduciary acted inappropriately in administering the estate or you are not satisfied with the information provided in the "Receipt and Release", you are entitled to request more information until your concerns are addressed.  If the fiduciary does not respond to your requests, or you remain dissatisfied with the response, you can demand that the fiduciary file a formal account and you can then object to that formal account in court – this is sometimes referred to as a “Contested Accounting”.   

 

Formal Accounting and Contested Accountings

The formal accounting is designed to provide the parties interested in an estate or trust (such as the beneficiaries) a complete overview of the fiduciary's acts.  The account will include information such as:  assets the estate collected, expenses paid, how the assets were invested (if invested at all), gains and losses incurred, list of distributions made to beneficiaries and creditors, a calculation of the fiduciaries' commissions, income tax and estate tax payments, etc. 

The parties interested in the estate or trust have the right to review the account, question the fiduciary, file objections to the account, and have their case heard before the court to determine if relief will be granted on their objections. 

In the formal accounting proceeding the fiduciary wants to demonstrate that he acted prudently and in the best interest of the estate or trust, while the beneficiaries conversely want to review the account to determine whether in fact the fiduciary did act prudently and in the best interest of the estate or trust.  If it is found that the fiduciary did not perform to the required standard and the estate was damaged because of it, the fiduciary may be held personally liable for the resulting loss.

Our office can assist a fiduciary in defending the account and his actions as fiduciary, and also assist beneficiaries in contesting and objecting to an account. 

What a lawyer will do in a contested accounting proceeding:

  1. The attorney will prepare a Petition to Compel an Account demanding that the fiduciary produce an Account within a given time period. 

  2. The attorney will appear in court on your behalf.

  3. The attorney will review the Will or Trust (if available). 

  4. The attorney will review the account detailing the acts of the fiduciary or demand a more thorough account.

  5. The attorney may examine and question the fiduciary concerning his/her acts, asking questions involving issues like:  Were all of the Estate’s assets collected?  Did the fiduciary self-deal, for example, were estate or trust assets invested in the fiduciaries’ small business rather than prudent investments?  Were all income and estate taxes properly paid?  Were creditor’s claims or distributions improperly paid?  Did the fiduciary seek appropriate professional advice while administering the estate or trust?  Did the trust or estate lose money because of the improper fiduciaries’ acts?

  6. The attorney may, after reviewing the Account and examining the fiduciary, file objections to the account, such as objections that:  The fiduciary failed to collect rents on real estate;  The fiduciary used Trust or Estate assets for his own personal benefit;  The fiduciary improperly paid a claim of a creditor;  The fiduciary invested all of the Estate assets in one stock;  The fiduciary sold estate property below its market value; The fiduciary hired and paid unqualified friends from estate funds.  

  7. The attorney may seek additional relief, such as compelling the fiduciary to have property returned to the estate or trust, or having the fiduciary removed. 

  8. The attorney may move the matter to trial where it will be determined whether the fiduciary will be liable for losses to the estate or trust and whether other requests for relief, such as removal, may be granted.