Before diving into the Executor’s accounting responsibilities, please let me acknowledge that you should always consult a CPA for their professional opinion. Each state has different laws and to err on the side of caution, please, please, please consult a CPA.

The executor of an estate has several important accounting responsibilities to ensure the proper management and distribution of the deceased's assets. In the State of Texas, the Executor is supposed to provide financials to the beneficiaries after 15 months from the time the loved one has passed away. Check with your state for your rules. If the Estate is complicated, the Executor should provide financials at least every quarter to keep the beneficiaries up to date. Being an Executor is not what it is all cracked up to be, it is time consuming and complicated. I don’t know anyone who stands in line saying, “Hey, I want to be the Executor!” I’m not going to sugarcoat this task; it is a lot of work. As a rule of thumb, expect that it will take anywhere from 3 – 5 years to get through this process.

Below is a list of responsibilities for the Executor after they have hired a Probate Attorney and a Certified Public Accountant:

1. Inventory of Assets:

• Compile a comprehensive list of all assets, including real estate, bank accounts, investments, personal property, and any business interests.

2. Valuation of Assets:

• Obtain appraisals or market valuations for assets as needed, ensuring accurate representation of the estate's value.

3. Set Up Estate Accounts:

• Open an estate bank account to manage incoming funds and pay expenses, keeping estate finances separate from personal finances.

4. Record Keeping:

• Maintain detailed records of all transactions, including income received, expenses paid, and distributions made to beneficiaries. Go ahead and invest in an accounting program such as QuickBooks Online or Quicken. At the end of this blog, I have provided for you a “sample” chart of accounts for you to keep track of all the assets. Please consult your CPA for further instructions. They may want you to use a different set of Chart of Account codes depending on the Estate you are handling.

5. Income Tracking:

• Record and report any income generated by estate assets, such as rental income or dividends.

6. Expense Management:

• Document and pay all legitimate expenses related to the administration of the estate, including taxes, debts, funeral expenses, and administrative costs.

7. Prepare Financial Statements:

• Generate periodic financial statements, including balance sheets and income statements, to provide transparency to beneficiaries and interested parties.

8. Tax Responsibilities:

• File necessary estate tax returns (e.g., federal estate tax returns, state inheritance tax returns) and ensure timely payment of any taxes owed. Don’t forget that you will need to file a Final Tax Return on the Individual that has passed away.

9. Distributions to Beneficiaries:

• Track and document all distributions made to beneficiaries, ensuring compliance with the will and any applicable laws.

10. Final Accounting:

• Prepare a final accounting of the estate's finances for review by the beneficiaries and, if required, the court. This should summarize all income, expenses, and distributions made during the administration process.

11. Communication with Beneficiaries:

• Keep beneficiaries informed about the estate’s financial status, major decisions, and timelines for distributions.

12. Legal Compliance:

• Ensure compliance with all applicable laws and regulations regarding estate management, including any fiduciary duties owed to beneficiaries.

I would like to conclude with this, effective accounting and transparent financial management are crucial for an executor to fulfill their duties ethically and legally. Keeping accurate records and maintaining clear communication with beneficiaries helps to build trust and prevent disputes.

Listed below is a Sample Chart of Account for your accounting software. As always, please consult your Certified Public Accountant before using these.