What does an executor have to include in a list of an estate’s assets?

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Q. When a will is probated, there is a list of all assets, including Payable on Death accounts that didn’t go into the estate. Does the executor have to list them? I thought the information was confidential.
— Executor

A. Executor duties can be complicated.

Let’s run through what you should know.

An executor’s primary role is to gather the decedent’s probate assets, use those assets to pay any debts and expenses, and then distribute what is left to the beneficiaries, said Andrew Novick, a certified financial planner and estate planning attorney with The Investment Connection and Brookner Law Offices in Bridgewater.

“To keep the executor honest, beneficiaries are entitled to request certain information from the executor,” he said. “That information is called an `accounting’ of the estate.”

Most commonly, the executor will prepare an informal accounting, Novick said.

“There are no hard and fast rules about what is included in an informal accounting, but the general rule is that the accounting should be detailed enough to show that each beneficiary is getting the appropriate amount from the estate,” he said.

The required level of detail often depends on whether the requesting party is a specific beneficiary or a remainder beneficiary, Novick said.

A specific beneficiary is someone who is left specified items of property, or a specified amount of money. If that beneficiary receives the entire bequest, then he or she has no legitimate need for information about the rest of the estate, Novick said.

In contrast, a remainder beneficiary is someone who gets all or a fraction of what is left over after all specific bequests are distributed. That person is generally entitled to more details about the estate’s assets, he said.

“If the beneficiaries are satisfied with the information that the executor provides through an informal accounting, they will sign a document called a refunding bond and release,” he said. “Then, the executor will distribute the funds to the beneficiaries and the estate will be closed.”

But a beneficiary who is not satisfied with the informal accounting can file a lawsuit to require a formal accounting of the estate, he said, and a judge will then decide whether a formal accounting should be required.

Formal accountings list the assets that came into the executor’s hands, every transaction that the executor has engaged in — such as selling assets, paying debts or expenses, receiving dividends, interest, or other income, etc. — and the assets that remain in the executor’s hands, Novick said. The formal accounting will end with a proposal of how the executor will distribute assets to the beneficiaries, he said.

Formal accountings can be long and complicated, and typically require the help of an attorney and a CPA to prepare.
Once the formal accounting is submitted, the county surrogate audits it and submits recommendations to the probate judge for approval or rejection.

Now to your specific question.

“Accountings, whether informal or formal, usually do not include non-probate assets, such as payable-on-death (POD) accounts, pensions, IRAs, 401(k) accounts, life-insurance policies that have a designated beneficiary, and assets that the decedent owned jointly with someone else in a form called joint with rights of survivorship (JWROS),” Novick said. “Because the executor never takes possession of these types of assets, there is nothing to account for.”

In rare cases, Novick said, non-probate assets will bear indirectly on an accounting so they must be included.

“For example, non-probate assets can sometimes impact the amount of taxes owed by the estate,” he said. “Or, the existence of non-probate assets can alter the rights of a surviving spouse who is excluded from the will. In these circumstances, the executor may have to include the non-probate assets in an accounting.”

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This story was originally published ion March 1, 2023.

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