Acting as the Executor of an estate, or Personal Representative as it’s called in Maryland, can be a complex and complicated process. If you are serving as a Personal Representative, you may be required to provide an estate accounting. If so, you will need to understand what that means and what is expected of you. In this article, I explain what is involved in an estate accounting.
What Happens During the Probate of an Estate?
The assets left behind by a decedent make up the decedent’s estate. Probate is the legal process that effectuates the transfer of those estate assets to the intended beneficiaries and/or heirs of the estate. If you are serving as the Personal Representative of the estate, it’s possible you were appointed to that role by the decedent in his/her Last Will and Testament. Your job is to oversee the probate process. Additional functions that are typically included in the probate of an estate include:
- Authenticating the decedent’s Last Will and Testament if the decedent executed such
- Identifying, locating, securing, and valuing estate assets
- Locating legal heirs of the estate if the decedent died intestate, or without a valid Will
- Allowing creditors the opportunity to file claims against the estate
- Litigating any challenges to the Will or estate
- Ensuring the taxes owed by the estate are paid
- Distributing assets to beneficiaries and/or heirs of the estate
Why Might an Estate Accounting Be Required?
In Maryland, estates are divided into two categories – Regular and Small. Any Estate with a gross value of $50,000.00 or less is defined as a Small Estate. A Regular Estate is defined as any gross estate with assets totaling more than $50,000.00. All estates are required to go through the formal, court supervised, probate and the Personal Representative of a Regular Estate will be required to submit an estate accounting to the court typically 6-9 months after the appointment of the Personal Representative, and once per calendar quarter until the estate is completely resolved and closed by the Orphans’ Court. A beneficiary, heir, or even a creditor may also request an estate accounting during the probate process. The court must order an accounting; however, if the party requesting the accounting has a financial interest in the estate, the court is likely to approve the request and order the accounting.
What Is Included in an Estate Accounting?
An estate accounting is a financial report prepared by the Personal Representative which explains, in detail, everything that has been done with estate assets up to that point in the probate process. As such, it is crucial to keep excellent records when serving as a Personal Representative.
An estate accounting will begin with an opening inventory that lists all estate assets owned by the decedent at the time of his/her death along with a date of death value for each asset. This includes tangible and intangible assets. If any additional assets are brought into the estate later, those must be included in the estate accounting as well. Throughout the probate process you may distribute some of those assets to beneficiaries or use them to pay creditors of the estate. If so, you must keep records of how the assets were used. There are also typically expenses incurred during the probate of an estate that must be included in an estate accounting. For example, if the Personal Representative needs an appraiser to value the decedent’s property or hired a real estate professional to sell any piece of real property, the fees paid for their services must be included in the accounting. Finally, an accounting must make it clear where the estate stands as of the date of the accounting. Specifically, it must make clear which assets remain part of the estate and how they will be used (to pay creditors, taxes, expenses) or distributed (and to whom).
Serving as the Personal Representative of an estate is a big responsibility and estates can take years to resolve. The Personal Representative is ultimately accountable to the beneficiaries of the estate. Therefore, it is crucial to keep good records and to understand the process, which is often confusing, complicated, and can be especially frustrating while simultaneously grieving the loss of a loved one. For these reasons, many families decide to engage an attorney to help with the estate administration, including the estate accounting. That’s one of the reasons our firm includes, for our estate planning clients, a post-mortem meeting with an experienced attorney for their Personal Representatives, as a part of each estate plan we design.
Contact Our Office For More Information On Estate Accounting
For more information, or if you have additional questions or concerns about an estate accounting, or the probate process, or would like to learn more about the benefits associated with a Gershberg & Associates designed Estate Plan, contact my experienced staff or myself by calling 410-654-3850 to schedule an appointment.