Creating an Accounting and being released from liability is an essential part of being an Agent, Executor or Trustee. Because you are a Fiduciary who can be surcharged from your own funds, approval of an accounting and obtaining a release of liability is vital. Accounting mistakes or accidentally leaving out information can lead to mistrust and expensive litigation, for which you could be held responsible.
The law allows you to use funds from the estate to retain an experienced Estate Planning Lawyer to help avoid pitfalls, so what reason do you have to not use this valuable tool?
A Durable General Power of Attorney gives an “Agent” power to manage assets. An interested person can force the Agent to file a Formal Accounting, explaining every action taken and justifying every expense.
If you served as an Agent you would be wise to receive a legal release for your service. First of all, long after you have completed your duties the court might force you to file a Formal Accounting if you have no release. Further, it is better to file your Accounting when you still have the funds to pay for the costs. Delaying may prove costly. Especially relevant, if no funds remain to pay the costs, you will personally shoulder the cost to assemble and defend the Formal Accounting.
Has a Beneficiary obtained a court order compelling you to account? If so, it would be wise to have the Formal Accounting prepared and defended by an experienced Accounting Lawyer. If you are unprepared, the judge could surcharge you for any amount you cannot properly explain.
Executors are subject to personally liable. Therefore, Executors, Personal Representatives or Administrators may retain an experienced Probate Attorney using estate funds. Further, you may use estate funds to hire an experienced Accounting Lawyer. This lawyer can prepare, file and defend a Formal Accounting. There is no excuse for making a distribution without first obtaining your protective release. If the beneficiaries will agree to sign an Informal Accounting, all the better. But if even one beneficiary refuses, then the accounting’s cost is a justifiable estate expense.
Has a Beneficiary has obtained a court order compelling you to account? If so, it would be wise to have the Formal Accounting prepared and defended by an experienced Accounting Lawyer. If you are unprepared, the judge could surcharge you for any amount you cannot properly explain.
A Trustee has a fiduciary duty. The beneficiaries, therefore, have the right to force the Trustee to file a Formal Accounting. In this accounting, the Trustee must explain every transaction and justify every expense. If the Trustee’s actions have wrongfully reduced the trust assets, the judge may surcharge the Trustee. The Trustee must use the Trustee’s own funds to replenish the Trust.
A Trustee can be personally liable. Therefore, expenses incurred in obtaining an experienced Estate Planning Lawyer’s advice are reasonable, ordinary and deductible. First of all, the wise Trustee each year obtains a legal release for all actions taken the prior year. The Accounting Attorney accomplishes this with an Informal Accounting release. If the beneficiaries will not sign an Informal Accounting release, the Accounting Attorney can prepare and file a Formal Accounting. Especially relevant, the cost of preparing, filing and defending the Formal Accounting is a deductible, normal trust expense.
Has a Beneficiary has obtained a court order compelling you to account? If so, it would be wise to have the Formal Accounting prepared and defended by an experienced Accounting Attorney. Most noteworthy, the judge could surcharge you for any amount you do not properly explain.
An agent, trustee or executor may choose to file a Formal Accounting even if the beneficiaries have not demanded that he or she does so. Voluntarily submitting a Formal Accounting is common when recipients refuse to release the agent, trustee or executor voluntarily. Without a release from the beneficiaries or the court, the agent, executor or trustee may be forced to account after distributing all assets, which means paying related expenses out of the fiduciary’s pocket. A court reviewed and approved accounting brings the process to a close. Interested parties are served the Formal Accounting and are free to submit objections. For this reason, it is wise to have an Estate Litigation Attorney assemble, submit, and defend the accounting.
If you have any questions about Assembling and Defending an Accounting or any other estate law topics, please contact us to schedule a free consultation.
For more than two decades Klenk Law has focused only on Estate Law. We’ve seen it all, and this experience allows us to explain complex Estate Law and Formal Accountings clearly and concisely. If you are involved in Probate Litigation, our experienced Probate Litigation Attorneys will make it easy for you to understand and provide top notch representation so you can make the best decisions.
Many firms assign Estate Litigation cases to their young lawyers or a general litigator. This is not cost effective. Being that Estate Litigation is what we do, our experience allows us to focus quickly on the issues that matter. By being focused, we arrive at the most cost efficient plan. We find the solution to your problem while the others are just warming up.
While some firms litigate, few of them have whole departments focused exclusively on estate matters. At Klenk Law, our Probate Litigators have the luxury of partnering with other lawyers from our Probate or Estate Planning Departments. The depth of experience we can focus on your case is truly impressive. Whatever issue you are facing, our team has the answer.
Our breadth of experience allows us to successfully represent beneficiaries taking on lazy trustees and executors. In the same way, we are equally skilled at protecting trustees and executors from ungrateful beneficiaries. Whether you are a fiduciary, agent, guardian or beneficiary, our skills will best represent your case.
Peter came highly recommended by a close friend to do our estate planning. We have been putting off for years. He is knowledgeable, professional and easy to work with.
Peter is excellent. I had a very complicated situation with my parents' estate planning and potential Medicaid needs. Peter was very knowledgeable in estate planning matters, able to define the best solution for the situation. Additionally, he was congenial and able to communicate effectively to my senior citizen parents the benefits of estate planning. He earned my trust, and more importantly, my parents' trust in a 45 mins consultation period. Highly recommend Peter. He is very easy to work with.
Tremendous firm with bright, kind and tenacious people. Great representation for our family.
I met Peter soon after he started his practice in Philadelphia, PA. He and his team have always been there for me and my various inquiries throughout my life-changing events, corporate relocations. I have lived in various cities throughout the nation, I have never had a problem in contacting Peter or a member of his team. He and his office responds quickly and returns calls to me to fulfill my requests for information or to revise my estate needs while posing relevant thought-provoking questions that I need to consider to secure my future. One of Peter's best qualities is his ability to answer clients complicated questions in a simple way to ensure comprehension.