Keeping estate accounts

Estate accounts should explain the movement from the assets at death to the balance distributed. They are more than a folder of bank statements: a reader should be able to connect each receipt, expense and beneficiary payment to supporting evidence.

Separate capital, income and expenses

Record sale proceeds alongside the asset sold, and show interest or rent arising during administration separately. Keep the original valuation visible so a sale at a different price can be explained. Record professional fees, property costs and reimbursements with invoices and approval details.

Use a dedicated ledger and identifiable estate banking arrangements. An executor's personal expenditure should not be mixed into estate costs merely because it appears on the same receipt.

Reconcile before presenting the balance

Match opening funds, receipts, payments and closing balances. List assets still held, outstanding invoices and reserves. Explain interim distributions so the final statement does not suggest a beneficiary is receiving their share twice.

The official estate administration guidance describes record keeping and the final accounting stage. ^[1] Use distribution records for beneficiary transfers and liability records for unpaid claims. If a co-executor queries an entry, preserve the question and correction so the final version has a clear audit trail.

Choose a ledger structure before transactions accumulate Use separate columns for the transaction date, bank date, description, category, amount and supporting document reference. Record the person who approved a payment where approval was required. These fields make the ledger useful even when a bank statement gives only a short merchant name. A simple spreadsheet can work for a straightforward estate if entries are consistent and source documents are retained. More complex estates may need professional accounts, particularly where there are trusts, business interests or income belonging to different beneficiaries.

Start with the assets and liabilities at death, then show what happened to each item. If an investment is sold, connect the sale proceeds to that investment's opening value and record selling costs separately. If an account is transferred without being sold, mark the transfer and recipient rather than leaving the asset apparently uncollected. Do not force every movement through a fictitious cash receipt. The accounts should describe the administration that actually occurred and allow the reader to distinguish cash from property still held.

Explain entries that a statement cannot explain An executor's reimbursement needs the underlying expense, proof of payment and an explanation of why the estate bears it. A transfer from the executor's personal account proves that money moved but does not establish its purpose. Where one receipt covers estate and personal items, identify the estate portion. Record any disagreement about a charge before finalising the accounts. This is particularly useful for travel, property clearance and purchases made by relatives, where a total can otherwise obscure several different reasons for spending.

Cash and personal possessions require deliberate controls because they may never appear on an institutional statement. Record cash found, who counted it and where it was deposited. For valuable objects, keep an inventory and the evidence of sale or transfer. If a beneficiary receives an item as part of their entitlement, record the agreed treatment and any valuation used. Avoid describing missing evidence as a miscellaneous expense simply to make the closing balance fit. An unexplained difference should remain an enquiry until it can be resolved.

Reconcile regularly and retain the correction history Compare the ledger with each estate bank statement at sensible intervals. Identify uncleared payments, receipts awaiting allocation and charges omitted from the ledger. Keep a note of the reconciliation date and outstanding differences. When correcting an error, retain enough history to explain the change, especially if an earlier version has already been circulated. Co-executors should know which file is current and who may amend it. Several independently edited copies can create apparent discrepancies that are really differences in version or cut-off date.

Treat income during administration distinctly from the original capital. Rental receipts, dividends and interest may require tax work and can affect the information provided to beneficiaries. Record gross amounts and any deductions in a way the tax adviser can use. The official estate guidance describes income and tax responsibilities during administration and the eventual accounting stage. ^[1] If a provider later corrects a payment or tax certificate, link the correction to the original entry so the return and beneficiary information can be reconsidered together.

Present the closing position with useful notes Give beneficiaries an account they can follow from opening estate value through receipts, costs and distributions to the remaining balance. Explain major differences between original valuations and realised proceeds. Show specific gifts and earlier interim payments clearly, together with any assets still held. A short note about an unresolved invoice or tax enquiry is more informative than a reserve with no explanation. Redact unnecessary account security details while retaining enough information for a recipient to understand the figures relevant to their entitlement.

Agree how questions will be raised and answered before treating the accounts as settled. Keep substantive queries and their resolution with the final version. Ask the estate adviser about appropriate approval, retention and any information beneficiaries need for their own tax affairs. If a later refund arrives, add a supplementary record showing its treatment rather than changing an already issued statement without notice. Clear closing records reduce the chance that a successor representative must reconstruct the administration from emails and disconnected statements years later.