In some circumstances, the executors or administrators of the estate may need to file, verify and pass the accounts of the estate with the Supreme Court. If required, the executors or administrators of the estate must verify the estate accounts and file them with the Court. The Court can go a step further and require that the estate accounts are passed. During this process, a Court officer will review the records of the estate to ensure that the accounts are correct. The process is similar to an audit.
What is the basis for verifying & passing accounts?
There is a duty of the executors or administrators of an estate to keep proper financial records for the estate. These records include detailed receipts for any transfer of property, any distributions from the estate or any expenses of the estate. Beneficiaries of the estate are entitled to inspect these records and may request that the estate accounts be verified and passed. In other circumstances, it may be that the executors or administrators are in a perceived conflict in their role, or there are vulnerable beneficiaries that need additional protection during the administration of the estate.
When do the executors or administrator need to verify the accounts?
Generally, there is no need for the executors or administrators to file any further documents including the estate accounts with the Court after the grant of probate or letters of administration.
The Court may request that estate accounts be verified and filed with the Court in several circumstances. The Court may request verified accounts if:
- the executors or administrator is a creditor of the estate
- the executor or administrator is the guardian of a minor who is a beneficiary
- one or more charities or public benevolent institutions are a substantial beneficiary of the estate
- a beneficiary requests that the estate accounts are filed
- the Court determines that it is appropriate in the circumstances that the accounts are verified and filed
It may be prudent for the executors or administrators to file and verify the estate accounts if they think there is a risk of a beneficiary or other interested person disputing their management of the estate and the accounts.
The accounts are generally verified and filed towards the end of the administration of the estate, but interim accounts can be filed if administration of the estate is delayed.
When will the estate accounts need to be passed?
The Court may require the executors or administrators of an estate to go a step further and have the estate accounts passed. The Court may require the estate accounts passed in any of the situations list above discussing filing and verifying the accounts.
If the executors or administrators are making an application for commission, the Court will require that they simultaneously also apply for the accounts to be passed.
What is involved in an application to have the estate accounts passed?
The executors or administrators of the estate must prepare an application to the Court for the estate accounts to be passed supported by evidence of all the estate assets, liabilities, receipts and payments.
The Court requires a statement of accounts for the estate which includes:
- any income/profit received by the estate
- any money distributed from the estate including receipts
- an account of any assets realised
- an account of any assets reinvested
- any assets transferred to beneficiaries
- any assets of the estate which are yet to be distributed or are unrealised
- any assets lost
- any funds that have been spent on professional advice including from a solicitor, accountant, value or real estate agent
- reconciliation of the estate accounts with any funds held in the estate bank account or solicitors trusts account
Once all the documents have been provided to the Court, a Court officer (usually a Registrar) will review all filed accounts and all the supporting documentation. The Court reviews the documentation to ensure that all the accounts balance and also review any disbursement incurred by the estate. Before passing the accounts, the Court may disallow any costs for professional fees incurred by the estate if the costs are for non-professional work which is executorial in nature. The executors or administrators will have to reimburse the estate for any amounts the Court disallows as non-professional work.
What does the Court not consider during the passing of accounts?
The Court is only tasked with ‘auditing’ the estate accounts and determining whether they are accurate or whether they include any disallowable amounts discussed above. The Court will not determine as part of an application for the accounts to be passed whether:
- an asset forms part of the estate,
- an asset has been undervalued or overvalued;
- all assets of the estate have been properly accounted for; or
- something else e.g. an asset, liability or expense should also be included in the accounts.
Matters such as those above should be dealt with by an administration suit against the estate or the executors/administrators.
What is the outcome of an application for the passing of the accounts?
Once the Court has reviewed the accounts, disallowed any professional fees and is confident that the estate accounts that have been filed and verified are accurate, the Court will issue a Certificate of Correctness of Accounts. The Certificate confirms that for the period that has been reviewed by the Court that the accounts appear to be correct and confirms the dollar value of any:
- capital assets realised by the estate
- income collected by the estate
- assets transferred to beneficiaries or creditors
- rents collected by the executors
- any revenue and profit if the estate has carried on a business of the deceased
- the balance of the estate accounts.
If the accounts being passed are interim accounts, the Certificate of Correctness will be used as the starting point for any further accounts to be passed at a later dated.
Where can I find more information on administration of an estate & passing accounts?
Our team are experienced in all aspects of the administration of a deceased estate including applications for the passing of accounts. Often an application for the passing of the accounts will be made with an application by the executors/administrators for commission. If you need assistance with any aspect of the administration of the estate, get in contact with us now to discuss your matter today.