Executor Accounting Spreadsheet - PDF
Executor Accounting Spreadsheet document sample
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OFFICE OF COMMISSIONER OF ACCOUNTS CIRCUIT COURT OF ROCKINGHAM COUNTY SUITE 206 57 SOUTH MAIN STREET HARRISONBURG, VIRGINIA 22801 TELEPHONE (540) 434-7306 FAX (866) 636-0807 (TOLL FREE) WEB SITE: WWW.ROCKINGHAMCA.INFO E MAIL: COMMISSIONER@COURTSQ.COM BY APPOINTMENT November 10, 2008 Dear Executor/Administrator: You have undertaken serious responsibilities by consenting to administer the estate of a decedent. Our office is charged with the responsibility of supervising your stewardship. We cannot offer you legal representation, but we can answer your questions about how the probate system works. IT IS IMPORTANT THAT YOU CALL FOR AN APPOINTMENT BEFORE COMING IN. You will see that if you KEEP ACCURATE RECORDS and PAY ATTENTION TO DEADLINES, your task will be made much easier. READ THE TWO PAGES OF MATERIAL ON DEADLINES FIRST. Your resources include: The enclosed material Your lawyer or accountant (or both) Our office, BY APPOINTMENT Our web site: www.RockinghamCA.info Our introductory seminar, held at 3 p.m. on the fourth Monday of each month and lasts about an hour and a quarter. It is free; just reserve a seat by calling Mary Fitzpatrick. Sincerely yours, David J. Hatmaker Commissioner of Accounts Mary A. Fitzpatrick Auditor OFFICE OF COMMISSIONER OF ACCOUNTS CIRCUIT COURT OF ROCKINGHAM COUNTY SUITE 206 57 SOUTH MAIN STREET HARRISONBURG, VIRGINIA 22801 TELEPHONE (540) 434-7306 FAX (866) 636-0807 (TOLL FREE) WEB SITE: WWW.ROCKINGHAMCA.INFO E MAIL: COMMISSIONER@COURTSQ.COM BY APPOINTMENT READ THIS FIRST !!!!!! DEADLINES FOR FILINGS: Inventory: Decedent’s Estate, Conservatorship and Minor Guardianship: Inventory is due 4 months after qualification Testamentary Trust: Inventory is due 4 months after trust is funded First Accounting: Decedent’s Estate: 12 month accounting period from date of qualification; Accounting is due 4 months after period ends* Conservatorship: 4 month accounting period from date of qualification; Accounting is due 2 months after period ends Minor Guardianship: 4 month accounting period from date of qualification; Accounting is due 2 months after period ends Testamentary Trust: 12 month accounting period from date trust is funded; Accounting is due 4 months after period ends Subsequent Accountings: All: Accountings for accounting year are due 4 months after end of accounting year, unless estate is wound up earlier* PENALTIES: Penalties and court fines are assessed for violating deadlines and must be paid out of Fiduciary’s personal funds * If all of the fiduciaries are also all of the residuary beneficiaries, a STATEMENT IN LIEU OF SETTLEMENT OF ACCOUNT may be filed instead of a full accounting. EXAMPLES DCEDENT’S ESTATE: Able qualifies as Executor of Dick’s estate on March 24, 2008. Able’s Inventory is due in the Office of the Commissioner of Accounts by close of business July 24, 2008 (or, if a Saturday or Sunday, then the next business day). Able’s first annual accounting will cover the period March 24, 2008 to March 24, 2009 and is due July 24, 2009. If the estate is fully administered early, a first and final accounting may be filed any time after 6 months following qualification (that is, September 24, 2008). CONSERVATORSHIP AND MINOR GUARDIANSHIP: Martha, age 95, is found to be incapable of looking after her affairs, and so the Court enters an Order appointing granddaughter Lucy as her Conservator. Lucy qualifies before the Clerk of Court on June 3, 2008. Her Inventory is due in the Commissioner of Accounts’ office by October 3, 2008. Her first accounting will cover the period June 3, 2008 to October 3, 2008 and must be filed by December 3, 2008. Her next accounting will cover the period October 3, 2008 to October 3, 2009 and will be due February 3, 2010. Similarly, George, age 5, receives an insurance settlement of $100,000.00, but the insurance company requires the appointment of a minor guardian (since George would spend it all on bubble gum). His mother Frances qualifies as Guardian before the Clerk of Court on September 7, 2008. Her Inventory is due January 7, 2009. Her first accounting, for the period September 7, 2008 to January 7, 2009, is due March 7, 2009. Her next accounting will cover the period January 7, 2009 to January 7, 2010 and will be due May 7, 2010. TESTAMENTARY TRUST: Dick’s Will (see DECEDENT’S ESTATE, above) sets aside a million dollars for a trust for the benefit of Rascal, his nephew, who has shown unmistakable signs of immaturity. The trust provides for income payments to Rascal until Rascal reaches age 40, at which time the trust will end and Rascal will receive the entire bundle. Able was named as Trustee of this trust and he qualified as such on March 24, 2008, at the same time he qualified as Executor. The estate must be administered before the Trust can receive its money, and so it is not until February 2, 2009 that the trust is funded. Able, Trustee, must file his Inventory by June 2, 2009. He must file his first annual accounting, for the period February 2, 2009 to February 2, 2010, by June 2, 2010. MEMORANDUM TO EACH EXECUTOR OR ADMINISTRATOR OF A DECEDENT’S ESTATE TABLE OF CONTENTS I. INTRODUCTION II. INITIAL PROCEDURES AT THE COURTHOUSE III. DUTIES OF EXECUTOR OR ADMINISTRATOR IV. THE INVENTORY V. THE ACCOUNTING VI. ALTERNATIVE TO ACCOUNTING(S) VII. UNKNOWN CREDITORS AND DISPUTED CLAIMS VIII. FEES FOR EXECUTORS AND ADMINISTRATORS IX. PENALTIES FOR NONCOMPLANCE X. FORMS XI. RECORD-KEEPING FOR ESTATES --------------------0-------------------- I. INTRODUCTION The Clerk of the Circuit Court has entered an order appointing you as Executor or Administrator* of the Estate of a Decedent. You qualified by making oath to well and truly administer the estate and by giving bond as required. You are now a fiduciary, charged with the highest duty of care the law requires of any person, over the assets of your ward. The Commissioner of Accounts is the person designated under law to supervise your work as fiduciary. These instructions are general in nature and are not intended to completely set out the law. We encourage you to seek the advice of a lawyer or an accountant, as appropriate. Reasonable charges for their advice are properly expenses of the estate. It is far easier to avoid errors altogether than it is to have to try to find a way to correct them later. II. INITIAL PROCEDURES AT THE COURTHOUSE A. Notice and Affidavit. A fiduciary must give written Notice of his qualification to each of the Decedent’s closest relatives and/or beneficiaries named in the Will, which must be mailed or given to each such person within 30 days after qualification. An interested person may waive notice. Having given the required Notices (or if you fall within an exception to the Notice requirement), you should fill out and sign the Affidavit before a notary public or a clerk of the court, and return it to the Clerk’s Office. This document informs the Court that you have complied with all notice- giving requirements. These forms are included with these Instructions. THE COMMISSIONER OF ACCOUNTS CANNOT APPROVE YOUR INVENTORY UNLESS YOU HAVE FILED THIS AFFIDAVIT. B. Recording fees and taxes. At the time you qualify as fiduciary, you must give an estimate of the value of all of the assets the Decedent died owning. The Clerk will assess a probate tax, based on the value of the assets reported either then or later. Other standard fees will be payable to the Clerk of Court and to the Commissioner of Accounts when you make filings of Inventories and Accountings. C. Bond and Surety. You must be “bonded,” that is, you must give an assurance that you will be personally liable to persons interested if assets are lost because of your mis-handling of the estate. “Surety” is the pledging of money or assets to guarantee your faithful performance. Sometimes the law waives the formality of corporate surety, in which case you pledge your assets generally for your faithful performance. Sometimes you must have corporate surety in the form of a bonding (insurance) company’s formal guarantee. * The term Executor is used if the fiduciary’s authority is derived from a will. An Administrator is a fiduciary who qualifies when there is no will. But: an Administrator c.t.a. is a fiduciary who replaces an executor. III. DUTIES OF EXECUTOR OR ADMINISTRATOR A. Separate accounts. Immediately open a separate checking and, if appropriate, a separate brokerage account, for all of your estate’s funds. You may not borrow from the estate’s funds or mix the Decedent’s assets with your own or anyone else’s assets. Make sure you choose a bank that returns cancelled checks or provides a photocopy of the front of the check and a monthly bank statement. (See Va. Code §26-17.9(c)). Near the end of your administration, there will be a month or more when the balance in the estate checking account will be very small but not zero. Inform your bank of this and make arrangements for service charges to be waived for that period. B. Tax Identification Number. Obtain and fill out a Federal SS-4 form and send it to the Internal Revenue Service. They will issue you a tax identification number (EIN) for the estate, which you will use on tax returns and give to banks and investment firms. You can obtain an EIN on line at www.irs.gov. C. Assets v. Debts. Once you have located and taken control of all of the Decedent’s assets, estimate as best you can the amount of the Decedent’s debts, including funeral expenses, medical bills and all other debts, taxes and expenses of administration that you will need to pay out. If you don’t have enough assets to pay out the above, immediately contact an attorney who regularly practices probate law. Your estate is probably “insolvent” – which, like bankruptcy, involves an extremely complicated set of rules about which creditors get paid, how much and in what order. IF YOU BELIEVE YOUR ESTATE MIGHT BE INSOLVENT, DO NOT PAY OUT OR DELIVER ANY ASSETS OR MONEY OF THE ESTATE TO ANYONE UNTIL RECEIVING PROFESSIONAL ADVICE. D. Notice. As required by Virginia Code §64.1-122.1, you are notified that: “As an executor or administrator of an estate, you are charged with the responsibility of filing any income, inheritance or estate tax returns required by state or federal law and an accounting of your handling of the estate.” E. Record Keeping: You should keep a ledger or computer spreadsheet, listing all receipts, including the date received, the payor, what it was for and amount. Similarly, you should list all of your disbursements for expenses and distributions to your beneficiaries, by date paid, payee, what it was for and amount. In this packet of material is a page entitled RECORD KEEPING FOR ESTATES, which you will find to be a useful guide. Keep and preserve your paperwork: receipts, bills, deposit slips, memos, bank statements, cancelled checks, investment reports and any other significant material. If real estate is sold by the estate, keep all of those records separately. F. Real Estate. Your power and authority over Decedent’s real estate must be sorted out. An attorney’s advice on this matter is important to obtain. Generally speaking, you have three different possibilities concerning the real estate: First: if the Decedent owned the property with another person “with right of survivorship,” the ownership of the property passes to the surviving co-owner under the “survivorship” clause of the deed. It bypasses the estate, and you have no responsibility for it at all. Second: If the Decedent owned real estate individually but had no will, its ownership passed directly by operation of law to Decedent’s beneficiaries as determined by law, but with the condition that creditors may require the real estate to be sold to pay debts if necessary. Otherwise, you have no responsibility for the real estate, and you should not spend the estate’s money to maintain the real estate. Third, the will may contain language specifying the disposition of real estate. It can direct that the real estate be sold, in which case, you must sell it according to the terms of the will. Or, the will might give you the power but not the direction to sell real estate. That power may be contained in a reference in the will to Virginia Code §64.1-57, or it may be spelled out in detail. If you are given the discretion to sell the real estate and wish to do so, we strongly suggest you consult with the Office of the Commissioner of Accounts first. IV. THE INVENTORY Within four months from the date you qualify as fiduciary, you are obligated to file an Inventory with the Commissioner of Accounts. An Inventory form is included with these Instructions, and you may make as many copies as you need. A sample Inventory is also included. The Inventory is a list of all the property or any interest therein, which the Decedent died owning, and its value as of the date of death. Referring to the top of the first page, the “court” is the Circuit Court for the County of Rockingham, and the “Court File #” has been noted on your receipt, on the front of your copy of the will or on the accounting form you have been given. If you can’t find it, just leave it off. Part 1. Should show a list of the personal property, including tangibles, bank accounts, stocks and bonds, CD’s and all other property except real estate owned by your Decedent and under your supervision and control. Do not include survivorship bank or investment accounts here. Part 2. Should describe all bank or credit union accounts, both savings and checking, and CD’s that your Decedent owned with survivorship with another person. Keep in mind that you generally do not administer these accounts; they are the property of the surviving co-owner. But creditors of the estate have the right to know what survivorship accounts there were, because a Virginia statute permits creditors to require that they be used to pay Decedent’s debts if necessary. Part 3. Should describe any Virginia real estate owned by your Decedent (but not survivorship property) over which you have the power of sale. You can describe this real estate as it is described on the real estate tax bill. Whether you have the power of sale will depend on the grant of your authority by the Court. If you are in doubt, consult counsel. Part 4. Describes any other Virginia real estate, that is, any real estate in Virginia owned by your Decedent over which you do not have the power of sale. Part 5. Describes any real estate outside of Virginia owned by your Decedent. All fiduciaries must sign the Inventory, list their addresses and date it. IF YOU CHANGE YOUR ADDRESS, IMMEDIATELY NOTIFY THE COMMISSIONER OF ACCOUNTS OFFICE. When you are ready to file the Inventory, call the Office of Commissioner of Accounts to ascertain what checks you need to attach. V. THE ACCOUNTING Unless you fall within the exception described in VI. ALTERNATIVE TO ACCOUNTING(S), You must file an Account for Decedent’s Estate within sixteen (16) months from your qualification. A form Accounting and a Sample Accounting are included with these Instructions. The first (and perhaps the only) accounting you file covers the twelve (12) month period beginning with your qualification. For each twelve-month period thereafter during which the estate has not yet been closed, you must submit an annual accounting. For example, if you qualified as Executor on April 15, 2002, the first accounting for the period April 15, 2002 through April 14, 2003 will be due at the Commissioner of Accounts’ office by August 15, 2003. If this is not a final accounting, a subsequent accounting for the period April 15, 2003 through April 14, 2004 (or through the final date of activity in the estate) will be due by August 15, 2004. At the top of the first page, insert the “Court File #.” The Circuit Court in which you qualified is the Circuit Court of Rockingham County. The Account Summary is the heart of the accounting. You will attach to this paper various lists of items comprising the various Lines. Line 1.: In the first accounting, Beginning Assets should be the taken from the Inventory. In subsequent accountings, Beginning Assets should be the same number as Assets on Hand at the end of your previous accounting. Line 2.: Show Receipts from all sources. Line 3: Show Gains on Asset Sales including gains from the sale of real estate, stock (net of commissions), or any other assets. Line 4: Adjustments mean increases or decreases in the value of assets to keep pace with the market. This category can be used for other adjustments, too, but see your Commissioner of Accounts first. Line 5: Totals Lines 1 though 4. Line 5 must equal Line 10 when you finish the accounting. Line 6: Disbursements include expenses of maintaining the estate, such as the bond premium, court costs and commissions, and your Decedent’s debts. Line 7: Losses on Asset Sales is just like Gains above, but here you’re reporting losses. Line 8: Distributions to Beneficiaries are payments or delivery of assets to those who have inherited from Decedent. Distributions may be money or property. Line 9: If your accounting is not a final accounting, you will be holding assets at the end of the reporting period. List them here. You can list them at the carrying value, rather than the market value, but if you do, you must list the market value below as shown. If you want to adjust the value of your assets annually to keep the accounting abreast of the current market value, you should use Adjustments (Line 4.) For all money or property that leaves the estate, the Commissioner’s office must have a voucher, that is, written proof that the recipient actually received money or property of a certain amount or value. This can take the form of a cancelled check or a simple written receipt. If your bank provides only a copy of the front of the check, you should also submit a copy of your monthly bank statement showing the check being negotiated. You should also submit originals or copies of your monthly investment account statement, your CD’s and any other supporting material requested by the Commissioner. VI. ALTERNATIVE TO ACCOUNTING(S) You will not need to file an accounting if all of the fiduciaries are also all of the residuary beneficiaries of the estate. Two common examples: if wife is the executor of husband’s estate and she is also his sole residuary beneficiary, she need not file an Accounting. Similarly, if Decedent had two children who are their father’s sole residuary beneficiaries and they both qualified as executors, they need not file an Accounting. But: if a surviving spouse is executor and is also the trustee of a living trust that is the residuary beneficiary under husband’s will, she must file an Accounting. Call the Commissioner of Accounts’ office if you have questions about this. If you are not required to file an Accounting, you must instead file a STATEMENT IN LIEU OF SETTLEMENT OF ACCOUNT FOR DECDENT’S ESTATE, a form that is included with these Instructions. You certify under oath that all of the estate’s creditors and taxes have been paid, all specific bequests have been paid over and delivered, and the fiduciary(ies) have distributed the balance to themselves as beneficiaries. If the STATEMENT IN LIEU cannot be filed within sixteen months of qualification, you must file with the Commissioner “. . . either (i) an interim account or (ii) a written notice under oath that the personal representatives intend to file a statement in lieu of the settlement of accounts when all requisites of this section have been met, which shall include an explanation of why such a statement cannot presently be filed. Second and subsequent interim accounts or notices of intent to file shall be filed annually until the statement in lieu of the settlement of accounts is filed.” Virginia Code §26-20.1B. Our office can give you a sample of the affidavit you need to file. VII. UNKNOWN CREDITORS AND DISPUTED CLAIMS If you contest a creditor’s claim, you can bring suit to have the matter adjudicated, or you may ask the Commissioner of Accounts for a hearing. You should not leave any such matter unresolved. If you fail to pay a creditor, but wind up the estate and file a final accounting, are you personally liable to that creditor? You should consult counsel on that question. The procedure to avoid such personal liability is for the Commissioner of Accounts to conduct a Debts and Demands hearing and for you then to have the Circuit Court enter an Order of Distribution setting out how the estate is to be distributed. VIII. COMMISSIONS AND FEES Your commissions and the audit and recording fees charged by the Commissioner of Accounts and the Clerk of Court are both set by the Virginia Supreme Court. You may find these schedules on-line at www.RockinghamCA.info, or you may call the Commissioner of Accounts office. IX. PENALTIES FOR NONCOMPLANCE The Supreme Court of Virginia, through the Judicial Council, sets penalties for non- compliance with deadlines and work quality. The Judicial Council provides for the assessment of a fine if you receive a “late letter”. If you do not respond to your Commissioner’s “late letter,” you should expect to be summoned to his office by a sheriff. If you do not comply with that summons, you will be summoned to Circuit Court and be subject to the penalties imposed by the judge. Additionally, you may be denied your commissions. Penalties, fees and fines must be paid out of your own funds. X. FORMS The following forms are available by clicking the TITLE below: NOTICE – You must send this to all Interested Persons listed in Va. Code §64.1-122.2 WAIVER OF NOTICE – Any Interested Person can sign this form, waiving the above NOTICE FFIDAVIT OF NOTICE – As soon as you send out the NOTICES, file this Affidavit with the Clerk of Court. It tells him that you have sent the NOTICES. He will send the Commissioner of Accounts a copy. The Commissioner of Accounts cannot approve your Inventory until this AFFIDAVIT has been filed with the Clerk. INVENTORY FOR DECEDENT’S ESTATE – File this with the Commissioner of Accounts. It tells the world what assets you are administering ACCOUNT FOR DECEDENT’S ESTATE – Tells the world what you’ve done with the assets STATEMENT IN LIEU OF SETTLEMENT OF ACCOUNT – Use this instead of ACCOUNT FOR DECEDENT’S ESTATE if all of the residuary beneficiaries of the estate qualified as Executors/Administrators. SAMPLE FORMS – Dummy forms to show you how a form should look when filled out properly XI. RECORD KEEPING FOR ESTATES Good record keeping is the secret to a trouble-free estate accounting. It isn’t hard to do, but the information must be recorded when the transaction takes place, otherwise you will have to put it together later like a particularly nasty jigsaw puzzle. If you have a computer, use the spreadsheet program or Quicken or a similar bookkeeping program. If you don’t know how, get your 10 year old granddaughter to help you. The information you need to record a Receipt, Disbursement or Distribution is: The transaction DATE The NAME of the person or entity who paid it in or who got the money or property WHAT the transaction was for The AMOUNT or value of the transaction Examples are: For a Receipt: 6/8/05 Sonny Jurgenson Enterprises -- Dividend $5,603.00 For a Disbursement: 3/5/04 Hopeless Funeral Home -- Funeral Expenses $5,693.23 For a Distribution to a Beneficiary: 12/3/05 Bernice Nieceburn -- 1/5 share of Residuary Estate $77,404.22 12/3/05 Richard Strauss -- Windsor Chair per ARTICLE III of Will $4,000.00 IMPORTANT: Keep all of the Receipts in one list, all of the Disbursements in another list and all of the Distributions in its own list. Arrange them chronologically. These lists will be attached to the front page of the Accounting. Neatness counts: if you’re not using a computer or typewriter, please print. The Commissioner of Accounts (or the Assistant Commissioner) will require you to show VOUCHERS to back up Disbursements and Distributions. VOUCHERS may be Cancelled checks Bank statements with pictures of cancelled checks Receipts A Receipt can be very simple: “Received of the estate of Darnell Whipple one Windsor chair valued at $4,000.00. (Signed) Richard Strauss” will do the trick nicely.