One of the most important duties of an executor of a will is to keep accurate accounts of his or her handling of the estate finances.
The executor’s duties begin when the person who appointed the executor dies. The executor must make an inventory of the deceased’s assets and liabilities. The executor will incur expenses, usually including funeral, legal and accounting expenses. He or she must also pay the deceased’s debts out of the deceased’s assets.
The deceased’s last will and testament may provide that specific assets go to some beneficiaries, and may also provide for specific cash gifts. The will then provides that one or more people receive the residue of the estate. The residue is what is left after the executor has paid the expenses and debts, and distributed the specific assets or cash. The remaining assets go to the “residual beneficiaries,” with each entitled to a share or percentage as set out in the will.
Each of the residual beneficiaries is entitled to an accounting from the executor. The beneficiary will then know the amount to which he or she is entitled, and how the executor has arrived at that amount.
The executor, or the executor’s lawyer, should provide the residual beneficiaries with an accounting of the executor’s handling of the estate before making a final distribution of the estate to the residual beneficiaries. The executor should itemize the accounts. The accounts should include the initial inventory of estate assets and debts, the proceeds of sale of assets, income earned in the estate, and payments of debts and expenses. If the executor wishes to charge a fee, the accounts should set out how much the executor is proposing to charge. The executor should also set out any interim distributions, any proposed holdback, and the amount each residual beneficiary will receive.
In British Columbia, it is common for the executor’s lawyer to send a release with the accounts to the residual beneficiaries, with a letter asking the beneficiaries to sign the release if they are satisfied with the accounts, and agree to any proposed executors fees.
What if a beneficiary doesn’t agree with the executor’s accounts? If the beneficiary does not approve the accounts, the executor must seek approval of the accounts from the Supreme Court of British Columbia. Section 99 of the Trustee Act, RSBC 1996, c. 464, provides that the executor must seek court approval within two years of the date of probate. The B.C. Rules of Court set out in Form 136A a format executors must follow when presenting accounts to the court.
An executor should be prepared to provide the beneficiaries with an accounting within a reasonable period of time. It is prudent for an executor to keep the beneficiaries informed of his or her progress in administering the estate, thereby reducing the risks of misunderstandings and disputes.
For their part, beneficiaries should be patient, and allow the executor reasonable time to do a proper job. It takes time to properly administer an estate.