In the last 2 articles we discussed waiver of the Executor’s bond in properly drafted Colorado Wills. In this article we will be answering the question- what is an estate accounting? More specifically, we will look at the estate Personal Representatives’s requirement to file a final estate accounting with the probate court. By definition, an accounting is a detailed financial report of the estate prepared by the PR for the probate court. The accounting must state all receipts, disbursements and distributions of principal and income for the accounting period. If you are thinking rough estimates on a scratch piece of paper, think again. An accounting is very detailed and it must show all of the estates activities down to the penny. For most medium sized and large estates, the estate accounting can become very complex. Furthermore, it is almost always prepared by a professional (attorney or CPA). As you might suspect, this can become quite expensive (hundreds if not thousands of dollars) and time consuming.
Furthermore, it’s usually unnecessary for the estate to go through this requirement if the PR is trustworthy and if all of the beneficiaries have confidence in their ability to administer the estate according to the decedent’s wishes. For example, when an adult child is trusted by their other siblings to properly administer the estate. A detailed accounting is required by law if any of the beneficiaires requiest one from the PR. In Colorado, an estate can be closed without a detailed accounting if it is never requested by the beneficiaries. Therefore, having a trusted PR who regulrly provides updates to the benefciaires will likely satisfy the beneficiares curiousity and help avoid the necessity for an accounting. When a family chooses to settle the estate absent an accounting, it can save the typical estate hundreds if not thousands of dollars and save your family from unnecessary delays in administering your estate.