Closing the Estate: Complete the Final Accounting

10 Monday Jul 2017

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Assent Forms, Attorney, Bank Fees, Bank Statements, Beneficiaries, Bookkeeping System, Close the Estate, estate account, Executor, Final Account, Final Accounting, Income and Expense Report, Income and Expenses, Inventory of Assets, Record Keeping System, Schedule A, Schedule B, Schedule C

After updating the estate account and completing the final Inventory of Assets, it was time to complete the final accounting. As mentioned in the article Closing an Estate in a Formal Probate Process, the attorney sent me three schedules that made up the final account. With instructions to review the schedules, I began to look them over. During the review, the schedules were already organized by category. Additionally, provided values, presumably by the attorney, were on Schedule A and Schedule B. Since the attorney warned me that values would appear, this didn’t concern me. Also, although the categories surprised me a little, the attorney would explain the categories the next day. So, after my review, the task to complete the final accounting was ready to begin.

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Track the Bank Fees in the Bank Statements

03 Monday Jul 2017

Posted by Robert Dowling in Record Keeping

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Bank Fees, Bank Statements, Bookkeeping System, Common Estate, decedent, estate, Executor, Income and Expense Report, Record Keeping, Record Keeping System

When dealing with the decedent’s bank accounts, the executor must track the bank fees, if any. Typically, in a common estate, an executor will close a decedent’s bank account without knowledge of any associated bank fees. Consequently, without examining the bank statements, bank fees may go unnoticed by the executor. If this happens, the oversight may carry through to the final accounting. Therefore, to avoid errors in the final accounting, the executor must look at the bank statements.

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Creating an Income and Expense Report for the Final Accounting

26 Monday Jun 2017

Posted by Robert Dowling in Record Keeping

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Bank Statements, Bookkeeping, Bookkeeping System, Common Estate, estate, estate account, Estate Administration, Estate Assets, Estate Property, Executor, Expense Schedule, Final Accounting, Income and Expense Report, Income and Expenses, Income Schedule, Inventory of Assets

By creating an Income and Expense report on the estate account, the final accounting becomes an easier task for the executor. In a common estate, the executor must reveal the following in the final accounting:

The executor must show the settled values of all the estate assets and the estate property. To do this, the executor enters the total value from the Inventory of Assets into the income schedule of the final accounting.
In the final accounting, the executor must show the income and expenses of the estate. To show the income and expenses of the estate, the executor must enter values from the estate account into the correct schedules of the final accounting.

According to the article Closing an Estate in a Formal Probate Process, finalizing the Inventory of Assets is a prerequisite to the final accounting. After finalizing the Inventory of Assets, the executor is ready to begin the final accounting.

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Closing an Estate in a Formal Probate Process

19 Monday Jun 2017

Posted by Robert Dowling in Probate

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Assent Forms, Attorney, Beneficiaries, Common Estates, Distribution, Estates, Executor, Final Account, Final Distribution, Formal Probate Process, Informal Closing, Inventory of Assets, Partial Distribution, Probate Court, Schedule A, Schedule B, Schedule C, Simplified Probate Process

When closing an estate, some states that use a formal probate process, allow for an informal closing for common estates. These states simplified the probate process for estates that are straightforward; not complicated or contested. Fortunately, Massachusetts is one of those states. In Massachusetts, closing an estate using the simplified probate process involves the following tasks:

Complete a final Inventory of Assets.
Using the Inventory of Assets in the final accounting, complete the final accounting.
Under cover of an assent form, send copies of the Inventory of Assets and the final accounting to each beneficiary.
After receiving the signed assent forms from each beneficiary, the executor must sign the form called Account (MPC853). The signed Account form, with the original Inventory of Assets and final accounting attached, essentially closes the estate.
Make the final distribution to the beneficiaries.

In Massachusetts, the simplified probate process allows straightforward, common estates to avoid the probate court when closing an estate. Instead, the approval of the Inventory of Assets and final accounting from all the beneficiaries informally closes the estate.

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Completing Preliminary Tasks to Close the Estate

12 Monday Jun 2017

Posted by Robert Dowling in Estate

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Attorney, Bookkeeping, Creditors, decedent, estate, estate account, Estate Administration, Estate Documents, Estate Property, Executor, Final Account, Final Accounting, Financial Statements, Fiscal Year, Inventory of Assets, Record Keeping, Schedules

On August 22, 2013, with nothing much left to do, I began preliminary tasks to close the estate. In fact, ten days prior, I was working on preliminary tasks until the belligerent beneficiary disrupted the process as described in the article One Last Gripe from the Belligerent Beneficiary. So, on August 22nd, it was a good time to pick up where I left off. On this day, I was finally able to update the initial distribution amounts to the estate account.

Although things were slow at this point, I knew I would be busy in the upcoming month. On September 1^st, two events would occur:

The one year anniversary of the decedent’s death is the end of the fiscal year for the estate. With all the property settled, this date sets a deadline for the estate income taxes to December 15, 2013.
The time for creditors to make a claim against the estate would expire. After this date, creditors had no recourse.

Basically, the two events clear the way to close the estate. Since the estate income taxes were off the estate, the only task left was to close the estate. So, collecting documents and financial statements occupied my time for the rest of August in preparation for the final accounting.

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The Estate Plan Poll

09 Friday Jun 2017

Posted by Robert Dowling in Uncategorized

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The Common Executor would like to know how many visitors have actually completed an estate plan.

Many people hit road blocks on how to set up their estate. As a result, people decide to put off the process for a later date. Procrastination can produce undesirable results if a person dies without, at least, a basic estate plan. So, don’t procrastinate. While you are here, participate in the poll.

[democracy id=”3″]

One Last Gripe from the Belligerent Beneficiary

05 Monday Jun 2017

Posted by Robert Dowling in Estate

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Attorney, Belligerent Beneficiary, Distribution Checks, Estate Administration, Estate Attorney, Executor, Final Accounting, Final Inventory, Probate Rules

Three days after mailing the distribution checks, the belligerent beneficiary made one last gripe. Unfortunately, the belligerent beneficiary made the mistake of contacting my attorney to complain. Since the attorney was under instructions to refuse direct contact from the beneficiaries, the attorney referred the gripe to me. As a result, the effort by the belligerent beneficiary to avoid contact with me failed. Anyway, the attorney informed me by email that the belligerent beneficiary had the following complaints about the distribution:

The beneficiary didn’t understand why the distribution happened early: that distributing early was against probate rules.
The beneficiary wanted to know why a final inventory and a final accounting wasn’t provided along with the distribution.
Since the beneficiary didn’t know about the distribution, the beneficiary felt slighted.

After reading the email, it was obvious to me that the belligerent beneficiary didn’t read the email sent to all beneficiaries about the distribution as mentioned in the article Estate Income Tax Returns: Execute the Plan. At first, I thought it was just an oversight that led to a misunderstanding. However, after further thought, it felt like one last gripe. After claiming the estate broke probate rules and not sending reports, this wasn’t a misunderstanding. To me, it was typical behavior from the belligerent beneficiary displayed throughout the entire administration. So, in reply to the attorney, I assured the attorney that I would handle the complaints appropriately.

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Plan a Simple Distribution in Your Will

29 Monday May 2017

Posted by Robert Dowling in Planning Tips

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Beneficiaries, Common Estate, Distribution Instructions, estate, Estate Plan, Estate Planner, Executor, Simple Distribution, Will

If you have a common estate and plan to distribute property through your will, plan a simple distribution. There is no need to force your executor to flow chart the beneficiaries and solve a complex algorithm to distribute property as depicted in the article Why is Calculating a Distribution from a Will Necessary?. In addition, complex distribution instructions increase expenses of the estate by forcing the executor to use outside help. So, to avoid giving your executor needless headaches and inflating expenses of the estate, plan a simple distribution.

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Why is Calculating a Distribution from a Will Necessary?

22 Monday May 2017

Posted by Robert Dowling in Planning Tips

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Attorney, Beneficiaries, Common Estate, Distribution Formula, Distributions, Estate Planning, Executor, Final Accounting, Formal Probate Process, probate, Tax Professional, Will

Typically, calculating a distribution from a will, in a common estate, is a result of poor estate planning. If an executor needs an analysis pad to figure out a distribution involving many beneficiaries, the estate plan has the following flaws:

There are too many beneficiaries in the estate plan.
The estate plan has a complicated distribution formula.

In the article The Estate Income Tax Returns: Execute the Plan, calculating the distribution written in the will forced me, as executor, to use an analysis pad, then an excel spreadsheet. The distribution formula consisted of twenty beneficiaries receiving different amounts of property calculated in percentages and shares. In fact, the complicated distribution formula took me a few drafts to get to a final draft. After completing the final draft on an excel spreadsheet, to make sure the distribution calculation was accurate, I emailed the spreadsheet to my attorney and the tax professional. The professionals reviewed the final draft and approved the distribution. Finally, after the review, I was able to distribute the property to the beneficiaries. In addition, the spreadsheet of the final draft became the template for the next distribution.

Although the distribution worked out well, an executor of a common estate should never have to calculate a complicated distribution. Therefore, calculating a distribution from a will should rarely be necessary.

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The Estate Income Tax Returns: Execute the Plan

15 Monday May 2017

Posted by Robert Dowling in Estate

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Attorney, Belligerent Beneficiary, Beneficiary, Distribution Checks, Distribution Formula, Distributions, Estate Income Tax Returns, Estate Property, Executor Compensation, List of Beneficiaries, Partial Distribution, Rental Property, Social Security Numbers, Tax Planning, Tax Professional, Tax Strategy, Tax-Deductible Expenses, Tax-Id Numbers, W-9 Form, Will

Soon after receiving the plan to complete the estate income tax returns, I began to execute the plan. As described in the article The Estate Income Tax Returns: The Plan to Complete the Returns, the plan, in part, involved distributing the proceeds of the rental property sale and paying out tax deductible expenses. However, before I could begin to execute the plan, I had to complete the following tasks:

Mail W-9 forms to beneficiaries refusing to give their social security number through email or by phone.
Contact the two charities for their tax-id numbers.
Contact the attorney and the tax professional for invoices.

So, after requesting the information, there was nothing left to do but to wait for the information to arrive.

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