Importance of Executor Record Keeping

The executor is the CFO of the estate. The executor’s responsibilities include:

1 – the preservation of estate assets;

2 – the collection of income due the estate;

3 – the payment of the debts of the decedent and the administration expenses of the estate;

4 – preparing the required income and estate tax returns;

5 – submitting an accounting of his or her actions so that the court may approve the distribution of estate assets to the ultimate beneficiaries of the estate.

The initial step in executor record keeping is the preparation of an inventory of the assets and liabilities of the decedent as of the date of death. This inventory will be used to prepare the estate tax returns, the executor’s accounting, and the determination of gain or loss for income tax purposes upon the sale of any of the assets of the estate. Probate and non-probate assets should be listed separately. Non-probate property includes:

• Joint Tenancy with Right of Survivorship (JTWROS) property.
• Tenancy by the Entirety property.
• Life Insurance policy death benefits payable to a designated beneficiary other than “estate of the insured.”
• IRAs, 401(k)s, and other retirement plans payable to named beneficiaries.
• Payable-on-death (POD) Bank Accounts.
• Transfer-on-death (TOD) Securities Accounts.
• Property transferred to a Living Trust during your lifetime.

In non-complex small estates a record of the transactions of the estate may be maintained through the estate’s checkbook. Deposits should be identified by date and source of funds. Payments should identify the payee and purpose of the payment. If a check is voided it should be so recorded in the checkbook in order to keep track of every sequential check.

All estate transactions should be made through the estate checking account or estate custody account. If a small cash expenditures is made personally by the executor the amount and purpose of the expenditure should be documented and receipted. The receipt should be kept with the records of the estate and referenced when the executor reimburses himself or herself.