Does an executor have to show accounting to beneficiaries?

In this episode, Peter Klenk explores the obligations of executors and trustees to provide accounting information to beneficiaries of estates and trusts. Learn about beneficiaries' rights to access this information and practical steps to take if they encounter difficulties in obtaining it.

Transcript

Hello, everybody. It's Peter Klenk. We're gonna talk a little bit more about death and taxes. Today's subject is about accounting. Specifically, does an executor have to show an accounting to the beneficiaries?

This is an issue that comes up more than you might think. So if you're unfamiliar with the background or what this is about, when an executor or trustee is in charge of an estate or trust, they have an obligation to the beneficiaries to act in their best interest, and they have to share information. Now, they don't have to call you up every time they're making a trade on the stock market or if they're writing a check, but they do need to provide you, as a beneficiary of the estate or trust, enough information so that you know what is going on. This can be monthly, annually, or whatever works out for both of you. You can't ask for a ridiculous amount and expect it to be done.

You can't say, "You know, every week send me an accounting"; that's just not practical. Depending on the situation, something annually is perfectly fine. Now, most of this is done informally. The executor or trustee will share data with you and say, "Here's what's going on," and ask if you have any issues or questions.

If you do, they answer them, and then things move along. That's the way it usually works. But what happens when the executor is just not sharing the data with you that you think you should have or that you need to understand what's going on? Well, what do they have to do?

They do need to satisfy your curiosity in a practical range. So when you say "accounting," it sounds like a vague comment, but accounting very specifically means that the person is submitting all the data necessary to clarify what they've done. If they're gonna do a formal accounting, if they're gonna submit it with all the necessary paperwork to the judge, they need to explain every expense and every decision to buy or sell. They need to account for all income, interest, dividends, rents, whatever it happens to be, and then come to a total at the end that matches up with what's in the account. So they need to justify everything in a formal accounting, and in an informal accounting, they really should do that too.

They can send you something vague, and if you say, "Yes, that's enough," then they've satisfied what you're asking for, and they're done. But they really do have to provide you with every detail. We work for executors all the time with hundreds of estates and trusts that we're doing work for, and we tell our executors, you know, why not submit all this information to the people voluntarily? Beneficiaries have a right to demand it, and why not avoid court if we can, right? Every situation is different, though.

If you have an executor who's not showing you information, well, what can you do? You can hire an attorney.

Now, remember, this is on your dollar because in this situation, the executor has an attorney representing them. That's not your lawyer; that's their lawyer. They're not there to do wrong to you, but they're not there to help you either. They're there to help the executor. So if you decide you're not getting enough information, you have to hire your own attorney.

And this is your attorney, and you pay the bill. You have to justify in your mind that this is an expense that you're willing to pay for. In many cases, it's the only way you're gonna get the information, right?

It's the only way is to get an attorney involved. If so, that's what we do. We can certainly help you out. We usually try to do things informally, but you have to admit that if it has gotten to the point where you need us to get involved, it's probably not gonna get done on an informal basis.

Now, it could be that the executor has a mental health issue. Maybe they have cancer or some issue that's slowing them down. Maybe they just have a personality issue with getting things done. Maybe they're just a procrastinator or have emotional issues that cause them to shy away from things that are new.

If we can help them get you the data you want, let's do it that way, right? But sometimes it's not. Sometimes it's something else. Maybe they've done something wrong.

Maybe they've done something improper, and they don't want you to know about it. Maybe they stole money, or maybe they made a mistake, right? Sometimes it's just anger—something you did when you were three irritated them, and this is the last chance they have to get even with you. Who knows? But for whatever reason, sometimes informal doesn’t work. Well, then you can have your attorney petition the court to get a formal accounting and get all the information.

Do you have a right to it? Absolutely. You're the beneficiary. As long as this information either raises your inheritance or potentially does, you have a right to ask about it.

That includes everything that was done during the term of the estate or the trust, and maybe even before, perhaps done by an agent. This should be pursued by the executor, but perhaps they're hesitating to do so for any number of reasons. So we have a right to get you your data.

So does an executor have to show the accounting to the beneficiaries? Well, again, they don't have to if you ask, but they have to if the judge makes them.

So that's why they usually do it upfront. And if they're not giving you the data, give us a call. Something's wrong, right? Something needs to be sorted out.

So we're happy to help. Anyway, that's a little bit more about another niche area of doing trust and estate work. It was fun talking to you all about death and taxes. If you have any specific questions you'd like answered, of course, feel free to go to the website and email us your questions. Happy to answer them.

Please like and subscribe. We're always posting new things—little tidbits that help you understand this area of the law and what your rights are. I hope you're gonna have a great day. Take care.