Estate Accounting | DeRusha Law Firm

Executors and Powers of Attorney for Property Keeping Financial Records

An Executor, or an Administrator of an Estate (“administrator” is the name that the Court gives the person that it assigns) has duties to collect funds, assemble funds, pay bills, and pay for services. This is a lot of work.

A Power of Attorney for Property has a similar duty as an executor or an administrator of an estate, but the person whose property they are looking after is still alive. However, the person is probably not in a mental or emotional condition to manage their own affairs. This could be the result of an accident, or an ongoing and progressive disorder such as dementia or Alzheimer’s.

The Importance of Records

Records must be carefully maintained. The records have to have a clear starting point. Then income or money comes into the picture, and some money is expended or spent. There can be investments, even a bank account collecting interest. All of these transactions have to be meticulously reported to other family members, beneficiaries of an estate, and also to a court, if someone makes this request.

But how should these records look? There is a specific approach to how these records should be laid out, that has developed over the years. There have been powers of attorney for property, and executors and administrators for hundreds of years. In British Common Law, which is what we use in Canada, there is a format that is traditionally used by the courts. But how is the executor or an administrator, or power of attorney, to know this?

It is a good question as to how they are to know this. No matter how hard the individual may try to be accurate, detailed, meticulous and honest, the records speak for themselves. In other words, if someone wants to make a challenge or raise what in court is called an “objection” they are entitled to do so. The objection is a complaint, criticism or request for clarification. But these records may go back a year or more. It is extremely difficult for the best of people to be able to explain particulars that go back over that time period, unless they have maintained and developed a good record keeping system.

But how do you develop a good record keeping system? The answer is you engage an expert. An expert is a person who has done this type of task in the past, understands the principles and expectations, and has the system set up (usually in a computer program), so that the records can be maintained.

DeRusha Law Firm, whose lawyers have been providing services and advice in the area of estates and powers of attorney for over 30 years, prides itself in having answers to questions, including “who would be a good expert in this situation? Our answer is Ms. Carla Preece.

Particulars about Carla Preece

Carla Preece has been assembling and maintaining these records for many law firms and individuals over the years. Some of the statements which she would make, might include the following:

Bank records do not necessarily provide sufficient detail about transactions;

Paying expenses from ones own personal account, and seeking reimbursement from the assets of the estate must be properly documented;

Intermingling of funds between the attorney or executor, and the estate, can and should be avoided by setting up strictly separate accounts for the estate/attorney/guardianship or trust

Credit cards used only for estate expenses can simplify record keeping

Maintaining receipts in chronological order and matched with the proper bank account is essential in order to be ready to respond to the most common form of “objection” which is a request for “vouchers” (copies of back up documentation);

The amount that someone might spend for an expert in an attempt to assemble accounts from documentation that is disorganized and incomplete can be significant; thus, it is much better to get some advice upfront to set up proper systems; and

A person acting as an executor, or a power of attorney, who is doing their best, and being honest, may trigger a greater number of objections if the accounting has unidentified entries and gaps and/or is not clearly set out.

DeRusha Law Firm has experienced many families quarreling with each other over problems that might have been avoided if they had produced a proper accounting. Thus, what is needed is to get someone like Carla Preece engaged early on for some general recommendations and planning.

Carla is available to receive information from time to time, and is of the view that an accounting done at the end of each year can be both useful and manageable. An accounting includes a snapshot of the assets as at the beginning and ending dates of an accounting period and also details the transactions that take the value of the assets at the start date to their value at the end date. DeRusha Law Firm, and its experienced estate lawyers, is of the view that getting these reports done accurately, and yearly, and distributed to those who have an interest, is an excellent way to make sure that people are confident that things are being looked after properly.

DeRusha Law Firm, and its experienced estate lawyers, wants to avoid the anxiety, time and expense of a court process. The best way of doing this is communication with properly completed, accurate reports going to family members from time to time. Then, if the court system is asked to review the situation, the court system is impressed with the detailed and meticulous accounting that has been made available through Carla Preece.

DeRusha Law Firm can refer an individual to Carla Preece, who will be pleased to discuss his or her particular circumstances, offer suggestions as to how to set up and maintain proper documentation and clarify the process of producing a court format accounting. Being set up for success with the assistance of an experienced court accountant, will minimize the overall cost of reporting to and dealing with interested parties.

The alternative occurs when a family member or the court system asks for detailed records to be produced. Then these “concerned family members” can request that their criticisms and objections be answered. This process, if not properly assembled from the beginning, can cost thousands and thousands of dollars to deal with in a court proceeding.

In conclusion, a good start leads to a good and proper, efficient finish.