A Final Accounting does not need to be filed in an informal administration. However, a Final Accounting does need to be filed in a Formal Administration. This distinction is very important.
In the formal administration, the Final Accounting should be filed with the court and mailed to the heirs prior to closing and the discharge of the personal representative of the estate.
The best way to begin a Final Accounting is to start with the estate Inventory – which has been discussed in previous articles.
A detailed Inventory and the personal representative’s accurate record keeping are essential. The personal representative should keep accurate records of every transaction during the administration, including all receipts and disbursements from the estate bank account.
The Final Accounting Schedules
Much like a tax return, the Final Accounting will have schedules. The schedules should include a description of the date an item was received or disbursed, the dollar amount and the description of the asset. This accounting will provide all the interested parties and beneficiaries with an accurate summary of the personal representative’s administration of the probate estate.
Separate schedules which detail interest, dividends, gains and losses on capital assets, sale and refunds are often included. Again, the schedules will assist the personal representative or his or her tax advisor and attorney in preparing the estate’s fiduciary income tax returns.
If the deceased person’s Will specifically devises income producing property, the sources of interest and dividends should be itemized so that the income can be paid with the bequest. Gains and losses also should be reflected on a separate schedule which provides a description of the assets, the proceeds received from the sale, the Inventory value (basis) and any gains or losses.
Furthermore, any personal property which was owned by the deceased person needs to be included. Personal property can include cars, furniture, and general household belongings. Any property which was owned by the deceased person but given to a party via a writing which was separate from the Will should also be listed under “Devises Paid and Distributed”.
Special Assets and Situations
Certain assets of the probate estate can require special attention. One example of a special situation is a contract for deed. In this case, the personal representative should report the income received from the contract for deed. The Final Accounting should also have a legal description fo the property but include a value of $0.00. As the personal representative receives monthly payments on the contract, the estate’s accounting records should show all money received and an offset entry for principal reduced and interest earned. The Final Accounting will reflect the total interest earned and the principal balance remaining as of the date of the accounting.
If interim Distributions have been made to the devisees and heirs of the estate, these amounts should be shown on the Final Accounting. It should also be pointed out that Minnesota Statute 524.3-904 provides that monetary devises will bear interest if not paid within one year after the initial appointment of the Personal Representative.
Balancing the Final Accounting
If the Final Accounting does not balance with the property which is shown as available for distribution, the personal representative will have some explaining to do. Basically, the Final Accounting – like a tax return – should be prepare by a professional. In most instances, the personal representative will be advised by a probate attorney and, perhaps, a tax professional (if the attorney does not have the expertise in this area.
Minnesota Probate Attorneys
Joseph M. Flanders and Flanders Law firm LLC is an experienced Minnesota probate lawyer in Dakota County, Minnesota. Mr. Flanders has worked with personal representative’s from many different backgrounds and skill levels to complete a Final Accounting and close out the estate.
For further information, contact the firm at 612-424-0398.