A family who is holding hands and at peace after the executor of an estate they are beneficiaries of answered the question, Does an executor have to show accounting to beneficiaries?

An executor has the legal obligation to show an accounting to beneficiaries unless beneficiaries have waived the accounting. But there is more to it than that, which only adds to your stress. You have a lot on your plate right now; you may feel overwhelmed and still be grieving the loss of a loved one. When a request for an accounting falls on your table, it could feel like one too many things to manage as you try to decipher probate code like an alien language. 

When does an executor have to show an accounting to beneficiaries? How do you prepare an accounting for a will? These questions only compound the emotions and tumult of this trying time, and the probate process can take a toll. But you play a vital role in honoring the legacy of the person who passed away. While failure to comply with California probate law during this process can potentially render you legally and financially liable, you do not have to shoulder this burden alone. 

At Marcia L. Campbell, CPA, we have helped executors like you navigate the complexities of probate with peace of mind. Here’s what to know about showing an accounting to beneficiaries. 

Does an Executor Have to Show Accounting to Beneficiaries?

Yes, an executor is typically obligated to give an accounting to beneficiaries, and the beneficiaries have the right to receive accurate and timely information, review relevant documents, request an accounting, file objections, and seek the removal of the executor if necessary.

In doing so, you are fulfilling your fiduciary duty of transparency and demonstrating your commitment to acting in the best interests of beneficiaries and the estate. The only time an executor may not need to provide an accounting is if the beneficiaries waived the accounting. 

“As an executor, showing an accounting to beneficiaries is essential and is representative of one of the most crucial aspects of this role to be aware of. Communication is key to keeping the peace and ensuring a smooth process. In fact, an executor not cooperating with beneficiaries or an executor not communicating with beneficiaries is often the impetus of litigation, which exposes you to legal and financial repercussions. Working with a professional can shield you from these hazards.”

– Marcia L. Campbell, CPA, Professional Executor, & Private Fiduciary

Related Article: How to Find an Executor for My Will in California

What is Estate Accounting?

When someone passes away, the assets they leave behind that don’t belong to a trust automatically become a part of their estate. Estates typically enter a court-facilitated process known as probate, which is designed to ensure the decedent’s final wishes are honored per the will.

An estate accounting, also known as a probate accounting, is the financial breakdown of what happened to the assets in the estate during the probate process. Accountings help you, the executor, keep track of the decedent’s assets and their value at the time of the decedent’s death, and they also provide a window into the activities of the estate. 

Related Article: I Have No One to Be the Executor of My Will. What Should I Do?

How Often Does an Executor Have to Show Accounting to Beneficiaries

As an executor, you must provide a formal accounting at least once a year, but beneficiaries can request an informal probate accounting in California at any time. When they do, you must produce it. 

Because of this, maintaining thorough and accurate records of the estate’s finances is crucial. Here is when you must provide formal estate accountings:

  • Annual accounting: You must prepare an accounting at least once annually after a year has elapsed since probate started. 
  • Final accounting: You generally provide a final accounting in probate right before you make final distributions.
  • Change of executor: When there is a change of executor, an accounting must be provided.
  • Court motion: If beneficiaries petition the court for a formal accounting and the court grants this petition, you must provide one. 

Related Article: Who Can Be an Executor if You Have no Family in California?

What Does an Executor Have to Disclose to Beneficiaries?

Beneficiaries of an estate have a number of rights that are crucial to understand when answering the question, Does an executor have to show an accounting to beneficiaries? These rights protect beneficiary interests and ensure the executor fulfills their duties with transparency and fairness.

Per California Probate Code Section 10950, if more than a year has passed since the beginning of probate administration and an accounting has not been filed, interested parties (i.e. beneficiaries) have the right to file a petition with the court to compel the executor to complete an accounting. 

Generally, beneficiaries have the right to:

  • Receive accurate and timely information, like updates regarding the progress of the estate administration. This information could include details about the estate’s assets, debts, and expenses. 
  • Review documents, which includes relevant documents related to the estate’s finances. These documents can be bank statements, invoices, receipts, and other documentation supporting the estate accounting
  • Request a probate accounting. This formal accounting should provide a detailed overview of the estate’s assets, income, expenses, and distributions, and executors must comply with such requests and supply the accounting within a reasonable timeframe. 
  • Object to an accounting if they believe it is inaccurate or unfair. Objections usually require filing a petition with the court overseeing the estate administration. 
  • Remove the executor if the individual consistently fails to meet their obligations, though this is usually reserved for extreme cases and requires demonstrating to the court that the executor’s actions have hurt the estate or worked against the beneficiary’s interests.

As an executor, it’s important to understand that if you encroach on any of these rights and fail to disclose information a beneficiary is entitled to, you are exposing yourself to the risk of litigation and potential financial and legal consequences. 

Because of this, enlisting the help of a professional executor or specialist CPA who can help manage the financial aspects of your role is crucial for your well-being. 

How Do You Do the Accounting for a Will?

One of the essential responsibilities an executor has is handling the deceased individuals’ financial affairs, which includes managing their assets, paying off debts, and distributing the remaining assets to the beneficiaries mentioned in the will. 

Ultimately, this process ensures transparency and allows beneficiaries to understand how the estate is being managed. 

As you fulfill these financial obligations, you must keep accurate records of all transactions and the estate’s assets and expenses. This can be a complex financial task. One way to think of an accounting for an estate is like a bank statement. 

It will have an itemized list of all assets at the beginning of the accounting period. It will then have a detailed record of each transaction, which should include where assets or money came from, where assets or money went, and why these transactions were made. Then, it should have the balance that is left at the end of this period.

This final accounting should also include relevant documents to ensure accuracy. Generally speaking, an estate accounting should include:

  • An inventory of estate assets and their value at the time of the decedent’s death
  • A summary of the estate’s debts and how the executor handled them
  • A summary of estate-related transactions with dates
  • A summary of gains and losses resulting from the sale of assets
  • A summary of any assets received by the estate and their value
  • Income earned by the estate
  • Payments made and refunds from tax returns filed
  • The value of the estate after expenditures
  • The value of every distribution made 
  • Closing statements

Still, an accounting should be an ongoing process, and this is what makes this role so time-consuming and labor-intensive. As an executor, you should provide regular updates and respond to beneficiary inquiries, both of which require meticulous bookkeeping throughout the administration process. 

Especially if you are an executor or administrator, working with a third-party professional, like a professional executor or accountant, who understands California probate law and can either prepare accountings for you or help you prepare them yourself is vital. 

In doing so, you will gain crucial peace of mind knowing your accountings are accurate and comply with California probate law so you can reserve your time and energy for other administrative tasks. It also will protect you from litigation.

How Long Does an Executor Have to Show Bank Statements?

An executor has up to one year from the beginning of estate administration to show bank statements. But it’s important to understand a few things about these documents. 

Supporting documentation such as bank statements or receipts is not generally required, but it is strongly advised to provide them for the sake of transparency. Moreover, should you face litigation, this supporting documentation could be crucial to defending yourself. 

Ultimately, showing bank statements is one way to maintain a harmonious relationship with beneficiaries, and executors generally have up to one year to provide them, which is when they will provide beneficiaries with supporting documents like bank statements.

Still, beneficiaries have a right to information, so as an executor, you should be providing this information whenever they request it. Because of this, you should always have these documents and an accounting ready to go just in case. 

It could also be helpful to have beneficiaries sign off on accountings so they cannot claim that you didn’t provide them.  

How Many Hours of Work Go Into Executing an Estate?

Ultimately, this is just one component of the responsibility you have as an executor. 

The amount of time an executor devotes to the job varies widely and depends on the size and complexity of the estate. Settling an estate takes an average of 16 months, and this process usually requires approximately 570 hours of work. 

What does this timeline mean? As an executor, you will usually have to prepare at least one formal accounting and one final accounting. 

Do You Need Help with Estate Accounting and Final Accounting for Probate? Work with a Professional!

So, now you know everything you need to answer the question, Does an executor have to show an accounting to beneficiaries? As an executor, communication with beneficiaries in probate is absolutely vital to ensuring a smooth process and minimizing the risk of litigation. While navigating the complexities of estate accounting can be daunting, it’s essential for ensuring a smooth and successful probate process. By understanding your obligations and seeking professional guidance to maneuver through the intricacies of estate accounting, you can fulfill your role as executor with confidence, ensure a seamless experience for everyone involved, and minimize the risk of legal issues.

An elderly couple working with a professional after their child learned how to stop an elderly parent from giving money away.

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