How Do I Prepare a Final Accounting for an Estate?

A final accounting for an estate is the comprehensive financial report detailing all transactions handled during the administration process. The executor prepares this document for the probate court to provide a transparent summary of how the estate’s assets were managed. This report confirms that all debts have been paid, taxes are settled, and assets are distributed correctly according to the will or state law. The court’s approval is a necessary step to formally close the estate and release the executor from their responsibilities.

Gathering Required Financial Information

The foundation of an accurate final accounting is the initial inventory of assets filed with the probate court. This inventory lists all property the decedent owned and establishes the estate’s initial value. Assets must be assigned a fair market value, which forms the baseline for the accounting.

Assets are valued as of the date of death. Federal tax law allows for an exception: the alternate valuation date. An executor can elect to value assets as of six months after the date of death. This election is permitted if it results in a decrease in both the gross value of the estate and the federal estate tax owed.

For bank and brokerage accounts, valuation means obtaining statements for the chosen date. Real estate requires a formal appraisal from a licensed appraiser, while vehicles may be valued using industry guides. Valuable personal property like jewelry or antiques should also be professionally appraised.

The accounting must track all income the estate generates during administration. This includes interest on bank accounts, stock dividends, and rent from real estate. If an asset is sold for more than its inventoried value, the difference is recorded as a capital gain.

All expenses paid from estate funds must be documented with an invoice or receipt. These costs include the decedent’s final debts and administrative expenses such as:

• Funeral expenses
• Court filing fees
• Attorney and accountant fees
• Appraisal charges

The decedent’s final debts, like credit card balances and medical bills, must also be paid and recorded. If an asset is sold for less than its inventoried value, this is documented as a capital loss.

Any distributions made to beneficiaries before the final accounting must be recorded. A will may direct that a specific piece of property or sum of cash be given to an heir early in the process. Documenting these preliminary distributions ensures the final division of assets is calculated correctly.

Structuring the Final Accounting Document

The financial data must be organized into a formal report for the court. Most probate courts require a specific format, which involves a summary page supported by detailed schedules. Many courts offer official forms to guide the executor, which can often be found on the local county probate court’s website.

A summary page presents an overview of the estate’s finances. It starts with the total value of the initial assets from the inventory. It then adds all income and gains and subtracts all expenses, losses, and debts paid, with the final calculation showing the value of assets remaining for distribution.

Schedule of Assets on Hand (Beginning Balance)

This schedule corresponds to the initial inventory filed with the court. It lists each asset the decedent owned at death. Each entry includes a description of the asset and its established fair market value, providing the baseline figure for the accounting.

Schedule of Receipts (Income)

This schedule itemizes all income the estate earned during the accounting period. Each entry must include the date received, the source, and the amount. This provides a record of all money that has flowed into the estate.

Schedule of Disbursements (Expenses)

This schedule details every payment made from the estate’s funds. Each entry must list the payment date, the payee’s name, the reason for the expense, and the amount paid. Corresponding receipts should be maintained for verification.

Schedule of Distributions

This schedule lists any assets or cash distributed to beneficiaries before the final accounting. Each entry must specify the distribution date, a description of the property or cash amount, and the recipient beneficiary’s name.

Schedule of Gains and Losses on Sales

This schedule details any sale of an estate asset. For each sale, it lists the asset, its inventoried value, the gross sale price, and the resulting gain or loss. This accounts for any change in asset value during administration.

Schedule of Assets on Hand (Ending Balance)

This schedule lists all assets remaining in the estate at the end of the accounting period. This is the property that will be distributed to the beneficiaries. The total value on this schedule must match the final figure from the summary page, confirming the accounting is balanced.

Submitting the Final Accounting and Closing the Estate

Once the final accounting is prepared, it must be shared with all estate beneficiaries. This ensures transparency and gives heirs the opportunity to review all financial transactions. Beneficiaries can see how their inheritance was calculated and ask questions, which helps prevent future disputes.

To formalize their approval, beneficiaries are asked to sign a “Receipt and Waiver.” By signing, the beneficiary acknowledges they have reviewed the accounting, approve of the executor’s management, and consent to the final distribution. This waiver can allow the executor to close the estate without a formal court hearing.

After securing the waivers, the executor files a package with the probate court. This includes the final accounting report, the signed Receipt and Waiver forms, and a “Petition for Final Distribution.” This petition asks the court to approve the accounting, authorize distribution, and close the estate. Filing may require a fee, which can range from $50 to several hundred dollars.

The court then reviews the documents. If all beneficiaries have signed waivers and the paperwork is in order, a judge will sign an order approving the accounting and distribution plan. This order grants the executor legal authority to transfer the remaining assets to the beneficiaries, completing the settlement of the estate.