According to duhaime.org, the Passing of Accounts legal definition is; The formal presentation of a trustee’s accounts to a court for approval. Recently a long-time bookkeeping client came to me with a problem. Her father had named her in his Will to be his Executor/Trustee. There were 5 beneficiaries, including my client. The reason she needed the Estate records brought up to date is due to a court order requesting the Passing of Accounts. One of the beneficiaries was questioning how the funds were handled and disbursed. The key message in this blog post – Be careful how you conduct yourself.
A couple of lawyers she approached to represent her in this court procedure refused, based on the state her documentation was in. It wasn’t until she indicated to a potential attorney that a professional (me) was pulling all the information together, that she located someone to defend the accusations made against her.
Here are the 6 reasons why she had a difficult time finding a professional to take on her case:
1. The Estate bank account was opened in 1997 and cheques were still being issued in 2014 from that account.
2. Three of the five designated beneficiaries were paid immediately from the proceeds of the house; before probate or personal taxes.
3. There was no valuation of the house at the time, or close to date of death. The house wasn’t sold for almost a year later.
4. One of the beneficiaries had a disability which caused my client to pay bills on his behalf then reimbursed herself for those expenses from his designated proceeds. But that wasn’t the problem. The problem was that she didn’t keep the receipts for those payments, and they were all in rounded amounts i.e., $40, $100, $300…
5. Since one of the beneficiaries was a minor at the time (the one whose lawyer brought this case in front of the court), a Trust account was established. But, some of the Estate expenses were being paid by the Trust.
6. The client was taking compensation from the Estate before the determination of compensation was established.
It is a huge responsibility to be an Executor/Trustee. And if you don’t know what you’re doing where record keeping is concerned, you need to speak to a professional on setting up a system for you, or handling the documentation on your behalf. You don’t want to be in front of the courts as it could end up costing you more than what you received as a beneficiary.
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Until next time,
The Team at OPEBE