Providing a Compulsory Accounting of the Estate in New York

A compulsory accounting is a judicial accounting that the Surrogate’s Court has ordered a fiduciary to file. An executor or administrator does not have to account on their own initiative; most New York estates are settled by delivering an informal summary and collecting receipts and releases from the beneficiaries. The obligation to file a formal account arises when a beneficiary or other interested person petitions to compel one under SCPA § 2205, when the fiduciary wants a decree discharging them, or when the court requires it because an interested party cannot sign a release. If you are the executor and a citation has just been served on you, or you are the beneficiary who filed it, here is how the process usually unfolds. Our estate accounting practice covers each stage, and our page on compelling an accounting explains the petition itself.

How a compulsory accounting starts

A beneficiary’s petition to compel is ordinarily entertained once seven months have passed since letters were issued. The court issues a citation directing the fiduciary to show cause why an account should not be filed. On the return date the court typically signs an order directing the fiduciary to file a judicial account within a fixed period, usually thirty to sixty days. Once the account is filed, the beneficiaries are cited again and may file objections, and the case proceeds like any judicial accounting. A fiduciary who ignores the order can be removed or held in contempt, so the citation is not something to leave on the desk. Our page on SCPA § 2205 goes through the statute.

Why a formal accounting is a burden for everyone

The fiduciary bears the work. A judicial account lists every receipt and every disbursement from the date of death on the court’s schedules, and the executor has to reconstruct it from bank statements, bills and receipts, on time the executor could have spent on their own affairs. Commissions do not go up because an accounting is compelled.

The estate bears the cost. Attorneys, accountants and sometimes appraisers are involved, and the fees can reach tens of thousands of dollars. Because those fees are usually paid from the estate, the beneficiaries who compelled the accounting end up sharing in the expense, and then complain that the executor is spending too much on professionals. Less is left to distribute.

The fiduciary bears the exposure. Once the account is on file the beneficiaries’ attorney looks for inconsistencies, because every unexplained entry is leverage for a settlement. A drawn-out proceeding can pressure an executor into surrendering part of a share they are rightfully entitled to just to make it stop. For a beneficiary with a genuine grievance, that pressure is the point; for one without, it is money spent for nothing.

Consider settling on an informal accounting

Once a compulsory accounting petition is filed, some account is going to be delivered. It need not end in a decree. An informal accounting lets the executor and the beneficiaries find common ground without the expense and time of a formal proceeding, and the petition can be withdrawn or held while they try.

The informal route only works if every beneficiary signs. A beneficiary who refuses a release can be cited in a judicial accounting, and a release obtained by withholding material information will not hold, so the informal account has to be as complete as the formal one would be.

Include every expense

As with a business tax return, you pay dearly for expenses you leave out. Anything the executor paid for the estate and cannot show is, in the beneficiaries’ eyes, money owed to them. Review the estate accounts, the decedent’s personal bank accounts and, on your attorney’s advice, your own accounts if you paid estate bills from them. Small expenses add up quickly; no expense should be left unaccounted for.

Stay involved

It is easy to let the attorney and the accountant handle the accounting. They are paid to do it, and an executor cannot do everything alone. But when the account is filed, the executor is the one in the crosshairs, not the professionals. Check their work; you are the person who knows what actually happened with the money.

Do not procrastinate

Start compiling the account as soon as the citation for a compulsory accounting is served, if not before. An accounting takes months to assemble, and the court will give you only thirty to sixty days once the order is signed, precisely because you could have started earlier. The sooner you begin, the more time there is to fix problems before the beneficiaries’ attorney finds them. Even if the beneficiaries ultimately settle on an informal account, the same records have to be gathered, so the work is never wasted.

Talk to us

We prepare and defend compelled accountings and we bring petitions to compel them, in the Surrogate’s Courts of New York, Kings, Queens, Bronx, Richmond, Nassau, Suffolk and Westchester counties. Uncontested accountings are handled for a flat fee; contested matters at $600 per hour. Call the Law Offices of Albert Goodwin at 212-233-1233 or email [email protected].