Estate Accounting Attorney in New York City

In an estate, an accounting is much more than just a list of numbers. An estate accounting is a report of everything in the estate. It's supposed to show all of the assets and all of the expenses of the estate.

Sometimes there are disagreements. Beneficiaries can claim that large assets are left off the accounting. Beneficiaries can also claim that the executor inflated his or her expenses.

What an Estate Accounting Actually Contains

A New York estate accounting is a formal document that follows a set structure laid out in the Surrogate's Court Procedure Act and the Uniform Rules. It is not a stack of bank statements and not a narrative description. It is a series of numbered schedules, each of which tells one part of the story. Schedule A lists the principal received by the estate – the date-of-death value of every asset that came into the executor's hands. Schedule A-1 lists realized gains on the sale of those assets. Schedule A-2 lists income earned by the estate during administration – interest, dividends, rental income, and similar receipts.

The expense and disbursement side is split too. Schedule C lists administration expenses such as court filing fees, attorney fees, accounting fees, and bond premiums. Schedule C-1 lists unpaid administration expenses still owed at the time the accounting is filed. Schedule D lists the decedent's debts that the executor paid, including credit card balances, medical bills, and final utility bills. Schedule E lists distributions already made to beneficiaries, with dates and amounts. Schedule F lists assets still on hand. Schedule G lists changes in investments. Schedule H lists computation of commissions. Schedule I lists outstanding obligations. Schedule J describes anything unusual that does not fit the other schedules.

When all of these schedules add up correctly, the executor has accounted for every dollar that came in and every dollar that went out. When they do not add up, the executor has a problem.

Why Beneficiaries Ask for an Accounting

Beneficiaries are entitled to know what happened to the estate before they sign off on a release. Sometimes the executor sends a clean accounting voluntarily, the beneficiaries are satisfied, and the estate closes informally with receipts and releases. Other times the beneficiaries see red flags. A bank account that was supposed to be in the estate is missing. A house was sold for less than its market value. Large checks were written to the executor or to someone close to the executor without explanation. Personal property has disappeared. Income that the estate should have earned during a year of administration is not on the report.

When those concerns exist, a beneficiary has the right under SCPA § 2205 to compel the fiduciary to account. A petition is filed in Surrogate's Court, the court issues a citation, and the executor must file a formal accounting. The beneficiaries then have a period of time to file objections to specific items.

Common Disputes in an Accounting Proceeding

Some disputes come up over and over. Missing assets are at the top of the list – joint bank accounts that the executor treated as a survivorship transfer when the facts show the account was put in joint name only for convenience, real estate that was transferred during the decedent's lifetime under questionable circumstances, retirement accounts that were paid to a beneficiary other than the estate but where the beneficiary designation may have been changed under suspicious conditions. These are pulled into the accounting through what is known as a turn-over proceeding or through a discovery proceeding under SCPA § 2103.

Inflated expenses are the second category. Executors sometimes pay themselves for time and effort that the law does not allow them to bill separately because their commissions are supposed to cover ordinary executor work. Excessive attorney fees, charges for personal expenses that were not estate-related, and reimbursements without receipts are all common targets. The objector files specific written objections, the executor responds, and discovery is conducted to test the disputed items.

Self-dealing is the most serious category. If an executor sold estate property to himself or to a relative at less than fair market value, used estate funds to make personal investments, or commingled estate money with personal accounts, the court can surcharge the executor – meaning order the executor to repay the estate with interest and potentially deny commissions. Surcharge proceedings can also remove the executor entirely under SCPA § 711.

What Happens at Each Stage

An accounting proceeding has several stages. First, the petition is filed asking the court to direct the executor to account. The executor then prepares the accounting and serves it on all interested parties together with a citation. Each beneficiary has a window – typically until the return date on the citation – to file objections. If no one objects, the court reviews the accounting and, if satisfied, issues a decree settling the account. The executor is then discharged for everything covered by the decree.

If objections are filed, the case moves into a litigation track. There is a preliminary conference, discovery (document demands, depositions, subpoenas to banks and brokers), motion practice, and ultimately either settlement or trial. Many accounting disputes settle once the discovery is complete because both sides see the evidence. Others go to trial in front of a Surrogate, who decides the disputed items, surcharges where appropriate, and enters a final decree.

Informal Versus Formal Accountings

Not every estate has to file a formal accounting in court. In a great many estates, the executor distributes most of the assets, prepares an informal accounting on a spreadsheet, and asks each beneficiary to sign a receipt and release. The beneficiary who signs releases the executor from further claims and acknowledges that the distribution is accepted. This is faster and cheaper than a court proceeding and works well when there is no real dispute.

Beneficiaries should not sign a release without understanding what they are giving up. Once signed, a release is hard to undo, even if information later surfaces that would have changed the beneficiary's mind. The right approach is to ask for an informal accounting first, study it carefully, ask questions, and only sign a release when satisfied. If the executor refuses to provide information, the beneficiary can move to compel a formal accounting in Surrogate's Court.

How Our Firm Approaches Estate Accounting Disputes

When a beneficiary contacts us about an estate accounting, our first step is to look at what has been provided so far. If there is no accounting, we draft a petition to compel one. If an accounting has been provided but it does not add up or contains items that look wrong, we identify the specific schedules and figures that need to be questioned and prepare written objections supported by documents.

We also represent executors. The accounting is one of the most exposed parts of an executor's job because every dollar is scrutinized. Executors who are well-prepared – who kept clean records, paid bills through the estate account, did not commingle, and documented every distribution – generally come through an accounting in good shape. Executors who relied on memory and shoeboxes of receipts have a harder time. Either way, we work with executors to put the accounting together correctly the first time, file it, and respond to any objections that come in.

Talk to an Estate Accounting Attorney

If that sounds like your situation, you need to speak to an attorney. Here at the Law Offices of Albert Goodwin, we handle estate accounting disputes for executors, administrators, and beneficiaries throughout New York. We will be happy to speak with you about your accounting dispute. You can contact us by phone at 212-233-1233 or by email at [email protected].

We Also Represent Executors and Trustees Preparing Accountings

Our work in accounting matters is not limited to beneficiaries. We also prepare accountings for executors, administrators, and trustees and defend those accountings when beneficiaries raise objections. When we prepare an accounting for a fiduciary, we follow the court's schedule format even when the accounting is informal. An informal accounting prepared to court standards is more accurate, draws fewer objections, and can be converted into a formal accounting quickly if a beneficiary later petitions the court.

Careful recordkeeping during administration is what makes a clean accounting possible. A recurring problem arises when a fiduciary receives cash that never passes through the estate account. For example, the estate sells a car, and instead of depositing the proceeds, the fiduciary uses the cash to pay administration expenses directly. Because no inflow appears in the estate bank account, the receipt can be omitted from the schedules — and beneficiaries who know about the sale may conclude that the fiduciary pocketed the money. The best practice is simple: deposit every dollar received into the estate account and pay every expense from that account, so there is a documented record of all inflows and outflows.

The accounting should also include a cash reconciliation. The closing balance of the estate's bank accounts must equal all principal and income received minus all disbursements and distributions. This reconciliation is how the court verifies that everything the estate received has been accounted for.

What a Receipt and Release Agreement Actually Says

When beneficiaries accept an informal accounting, they receive their distributions in exchange for signing a receipt and release agreement. These agreements typically go well beyond a simple acknowledgment of payment. A standard receipt and release provides that the beneficiary:

• Acknowledges that the fiduciary has accounted for all estate assets and that the beneficiary has examined and approved the account;
• Acknowledges receipt of the distribution;
• Releases and discharges the fiduciary from all liability related to the administration of the estate or trust;
• Agrees to refund any amount received that the beneficiary was not properly entitled to;
• Agrees to indemnify the fiduciary against claims later brought against the fiduciary, and to reimburse the fiduciary for expenses and costs incurred in defending such a claim.

The refund and indemnification clauses are often overlooked. A beneficiary who signs is not just accepting money — the beneficiary may be taking on obligations to give money back or to cover the fiduciary's defense costs in future disputes.

The Cost of Going Formal

When objections cannot be resolved through negotiation and a formal accounting is filed with the court, the costs of the proceeding are generally charged to the estate or trust. Court fees and additional legal fees come out of the residuary before distribution, which means prolonged litigation reduces what the beneficiaries ultimately receive. This is one reason both sides often have an incentive to settle accounting objections out of court.

Kinship Hearings Within Accounting Proceedings

An accounting proceeding sometimes includes a kinship hearing. This happens when there is a dispute or uncertainty about who the decedent's legal heirs (distributees) are. Before the court can approve distributions in the final decree, it must be satisfied that the people receiving the money are actually entitled to it. In a kinship hearing, claimants present documentary evidence and testimony establishing their relationship to the decedent, and the court determines the rightful distributees before the account is settled.