Informal accounting is easier, cheaper and faster than a formal accounting. A Compulsory Formal Accounting is a Drag. If you are an executor or administrator of an estate, the last thing you want to do is to have to provide a formal accounting, unless the beneficiaries are making you do it.
Try to settle for an informal accounting. If the beneficiaries are asking questions, you will have no choice but to file some sort of an accounting. An informal accounting is a good way for the executor and the beneficiaries to try to find common ground and resolve a case without the expenses and the time commitment of a formal accounting.
An informal accounting has many benefits over a formal accounting:
- It requires less work. Because you don’t have to use court-mandated forms, there is less work to do. For example, you would not have to list every single item of expense and income, you can just give a summary of income and expenses.
- Cheaper. Less attorney and accountant fees.
- Easier to work things out. The atmosphere of an uncontested informal accounting is less contentious so it’s easier to work things out.
- More money left over for a settlement. As opposed to giving estate money to lawyers and accountants, keep the money for yourselves and the beneficiaries
Make sure to include all expenses. Just like filing a tax return for a business, you will pay dearly if you neglect to list all of the expenses in your informal accounting. Make sure the beneficiaries will not charge you for money that is not due to them but was spent on the expenses of the estate. Look over the estate accounts and even the decedent’s personal bank accounts and possibly your personal bank accounts (ask your estate attorney). Even small expenses can add up to large sums fairly quickly. No expense should be left unaccounted for.
Be involved in the informal accounting process
It’s easy to just let the attorney and the accountant handle the accounting. After all, they’re getting paid to do it. You can’t do everything yourself, and you have to delegate. However, this does not mean that you should not be involved in the process. After all is said and done, it’s you who is in the crosshairs, not the attorney or the accountant. So make sure you check their work.
Do not procrastinate. Start compiling the accounting as soon as the Citation for Compulsory Accounting is served, if not before. This is because it takes months to put together an accounting, but the court is only going to give you from thirty to sixty days. Courts know that executors have the option to start putting the accounting together before the court issues the Accounting Order; this is why courts give so little time to file an accounting. Don’t procrastinate – call your New York estate lawyer and tell them to start working on the accounting right away.
The sooner you start, the more time you have to fix any issues that may come up, so that you’re one hundred percent protected from any allegations that may come up from the beneficiaries. Even if the beneficiaries will ultimately agree to work things out based on an informal accounting, you will still need to file some kind of accounting, so get to work.
A formal accounting has many downsides, not only for the executor but for the beneficiaries as well:
- It requires a lot of work from the executor. The executor has to spend time on the accounting, time he could have spent on his professional and personal pursuits. The executor will not be paid extra for the work of providing an accounting.
- Expensive. The fees for attorneys, accountants, and appraisers being involved can add up to tens of thousands of dollars.
- Gives beneficiaries another reason to complain. To add insult to injury, the beneficiaries will complain that the executor is spending too much on lawyers and accountants, even though it is the beneficiaries themselves who created the accounting situation in the first place.
- Exposes the executor to potential liability. Once the executor files the accounting, the beneficiaries’ attorney will try to find inconsistencies in order to extract a settlement from the executor.
- Can force unjust settlement. The prospect of a drawn-out compulsory accounting proceeding can squeeze the executor into giving up a share of their rightfully owned estate just to avoid the torture.
- Leaves less money in the estate to be shared. Money can be better spent by you and beneficiaries then paying lawyers and accountants.
Hire an experienced estate attorney. If you are looking for an estate attorney who is experienced in preparing an informal accounting, we at the Law Offices of Albert Goodwin are here for you. You can call us at 718-509-9774 or send us an email at email@example.com. We can compile and submit your informal accounting and make sure that your rights are protected.