Executor Duties: Keeping proper records

First time executors are often surprised by the amount of work involved in the administration of an estate. There are several duties an executor must keep in mind. Each estate is unique and can offer its own complexities. The challenges facing the executor may be compounded by the rights and scrutiny afforded to the beneficiaries of an estate. It is the beneficiaries that may hold the executor accountable should they fail to complete their duties appropriately.

One of the more onerous duties of an executor is the duty to “account” to the beneficiaries. This includes providing the beneficiaries with a detailed record of all transactions of the estate beginning from the date of death until the eventual distribution of funds to the beneficiaries in accordance with the Will.

The duty to account to the beneficiaries is justified by the direct impact each transaction completed by the executor can have on the amount of inheritance eventually received by the beneficiaries. Decisions surrounding debt repayment, expenses, and investment of funds can all affect the net proceeds available to the beneficiaries upon distribution.

The executor is required to provide the “estate accounts” in a specific format required by the Court. It is unlike traditional record keeping and can be difficult to produce without professional experience with such Court form accounts. The value of the original assets and debts must be included, followed by a chronology of all capital receipts, capital disbursements, revenue receipts and revenue disbursements. The transactions directly impact the calculation of the executor’s compensation, which will require the consent of the beneficiaries (or alternatively the Court).

On smaller, less complicated estates, the executor may decide to provide a more informal accounting to the beneficiaries. The obligation to provide details of each receipt and disbursement during the estate administration remains. However, if the estate is quite simple, it may be possible to provide this information in letter format.

The beneficiary of the estate can require the executor to provide their accounts to the Court for approval through the “passing of accounts” process. This often occurs if the beneficiary has not been provided with estate accounts by the executor, or feels that the estate accounts are insufficient. The executor may decide to voluntarily pass their accounts before the Court. In some circumstances this may be necessary, such as if there is a beneficiary without capacity.

The executor should keep evidence (ex. receipts, information used to form their decisions) for all transactions completed during the administration of the estate. They may need to eventually provide such evidence to validate certain transactions that are being scrutinized by the beneficiaries or the Court. If the executor is unable to fulfil their duty to account, they can be held personally liable for any losses or perceived losses to the beneficiaries. Accordingly, it is important for executors to keep these duties in mind and seek professional advice when required.

David Henderson is a partner at Agro Zaffiro LLP law firm with expertise in Estates and Business law.