tory would be the necessary preliminary to any bookkeeping, as it gives the opening entries and the prima facie values, and it would be difficult to keep books without such information for a foundation. In all states where inheritance taxes are assessed, an accurate, detailed inventory is required for that purpose and the appraisal must be by sworn appraisers. For all personal assets, as shown by the inventory, goods, cash and claims, the representative must charge himself. He takes them into his possession and is responsible for them. The books of account must therefore: 1. Show what things came into possession. 2. Distinguish between cash and other assets and claims. 3. Record the payments made and their purpose. When the final transfers and payments have been made, the estate has been settled and the representative's work is done. In the case of a testamentary trustee, he must charge himself with the property both real and personal, placed with him in trust. His books as trustee must show his dealings with the property and with the beneficiary. His record may extend over a long term of years, and problems of some difficulty at times arise. A trustee's records must discriminate between principal and income. The principal is to be preserved intact for the ultimate beneficiary or “remainderman" as he is called. (See on this subject Chapter XXXV, "Corpus and Income.") The income is disbursed as it accumulates to the immediate beneficiary or cestui que trust. Questions come up when the rights of beneficiaries and remaindermen conflict, and it is not always easy to decide such matters and to record them with accuracy. Where the same person or persons are first executors and later testamentary trustees, the difference in function demands separate books in order that the transactions may be clearly distinguished. § 200. The Probate Court's Supervision If an executor or other fiduciary neglects to keep adequate records, this fact will appear as soon as he is required to account. If his records are incomplete or faulty, the statement will be defective and it will be called in question. At any "intermediate accounting" anyone interested may file objections to the insufficiency or inaccuracy of the statement; and even if no one does this the judge of the probate court may compel the representative to undergo an examination and to submit an intermediate account that is satisfactory. Surrogate Ransom, of New York, has summed up the power of the probate court as follows: The account should state if an inventory has been filed, and, if none has been filed, the account itself should furnish the information usually thus supplied. It should likewise state whether or not advertisements for claims have been published, what claims have been presented, what allowed, and what rejected; and the time and manner in which they were rejected or disputed, and the reason therefor. Also, what claims have been presented and allowed since the expiration of the publication of the advertisement for claims. The accountant should then proceed to credit himself with funeral charges and expenses of administration, with moneys paid to creditors (naming them) and payments to legatees or next of kin. He should state the age of legatees or next of kin, if any are minors and whether they have guardians, and, if so, their names and places of residence, and how appointed. If there is any other fact which has occurred, as part of his proceedings, which may affect the estate or the rights of any distributee, or his own rights, he is bound to state it. He must not only state in what character his payments were made, as charges or of administration, distinctly, but he must produce vouchers supporting each payment; or in cases of claims under $20,00, where no voucher is produced, he must make and present, in lieu of voucher, his own oath positively to the fact of payment, when made and to whom. Unless the order of the Surrogate requiring an executor or administrator to render an account of his pro- The foregoing refers to an intermediate accounting. The court would have much more power to compel a satisfactory final accounting. If the representative had not kept adequate records and it would be impossible for him to prepare a satisfactory accounting, he and his bondsmen would be liable in damages for any loss caused by his default, and it would be sufficient cause for his removal by the court. The decree of distribution may be rendered on the day on which the accounting is presented to the court if the executor has secured from all interested persons signed approvals of the account and waivers of their rights to be notified of its presentation. When such approvals and waivers are not secured, the length of time after the presentation of the account before the decree of distribution can be rendered varies in the several states. § 201. Settlement out of Court In some cases settlements to the satisfaction of all concerned are made out of court. If one person were made executor and residuary legatee, and he paid all taxes and all outstanding claims, and satisfied all legatees, he would then be the only one left who was concerned with the estate. No one would be interested in calling for a final accounting, and the probate judge and the court officials would not be likely to stir the matter up on their own account. When a man leaves all that he has to his wife and appoints her executrix, this is likely to happen. If a lawyer is employed, he will probably, for the sake of clean work and to 1 Matter of Dwight, 9 N. Y. Supp. 927, 928. earn his fee, see that final accounting is had and that the account is approved and the executrix discharged. § 202. Settlement in Court The object of settlement in court is to give all concerned in the settlement of the estate an opportunity to examine the different transactions, ask explanations of what is obscure, and object to any errors, mistakes, or omissions. To make this accounting effective for the protection and discharge of the executor, all persons interested must be legally notified. If there is any failure in the matter of notice, the party affected may come in at some later time and call on the representative for a further accounting. Also, if the representative omits any matter, he can be called upon later to account for it. As to all matters set forth in the account and as to all legally notified, the accounting is final. The executor may voluntarily, at any time after the period fixed for administration has expired, ask that a time be set and that those concerned be duly notified, or, if he is not prompt to account voluntarily, he may be called to account by any creditor or legatee who has not been paid. § 203. Conclusiveness of Final Settlement (See § 203.). persons If the assets of the estate have all been accounted for and the creditors have all been paid, the distribution of any remainder will be ordered by the court. If all legatees have been paid in full, what is left will go to the residuary legatee. If proportionate part payments have been made to all legatees, and there was not sufficient remaining to pay them in full, the court would direct a proportional distribution of such remainder. If it was to be paid to a trustee, the court would direct such payment. The representative should then make such distribution as the court orders, and should return his vouchers showing that he had complied with the court orders. He should then pay out the remainder as directed, present his vouchers to the court, and ask that his bond be canceled and that he be discharged in such form as the local usage takes. The whole subject of accounting is taken up in detail in Part VI of this work. REVIEW QUESTIONS 1. In what two connections is the word "accounting" used? For what purpose is a record kept? What is the object of the accounting? 2. Is any form prescribed in which accounts are to be kept? Have you a copy of the inventory form used in your own court? What two matters must the books show? How would a trustee's records differ from those of an executor? If a person is first executor and then testamentary trustee, what should he do about keeping accounts? 3. What authority has a probate judge over the statements rendered by a representative? What should a comprehensive accounting show? What should be given as proof of all small claims? What would be the penalty where the representative failed to render intelligible statements? 4. When can an estate be safely settled out of court? 5. What is the object of a settlement in court? What is the general procedure at such a settlement? 6. If the final accounting is satisfactory, what would the court order? What is done then? |