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 and 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 whether to creditors, legatees, or next of kin, or for expenses for funeral 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 proceedings, is obeyed in this manner, as plainly indicated by the statute, he will not have made the proper response to the order.❜

§ 550. Lack of Knowledge of Subject

Many persons who are appointed to act in fiduciary capacities have, at the time of their appointment, little knowledge of the duties imposed upon them. Especially is this true in regard to the manner of keeping their records and preparing reports therefrom for presentation in court. The necessity for this knowledge is often not recognized until they are called upon to render an account of their transactions for the scrutiny of the court before receiving a discharge from the obligations which they have assumed.

The impression that little knowledge is necessary has been caused by the prevalent idea that the sole duties of an executor are to receive and disburse money and, at the end of his ad

2 Matter of Dwight, 9 N. Y. Supp. 927, 928.

ministration, to fill out a blank form provided by the clerk of the probate or surrogate's court. As a result of this impression, testators in selecting their executors have persisted in requiring only social qualifications. Much difficulty and financial loss have thus been caused by the failure of administrators and executors to understand early enough for them to make their records complete, what would be required of them in the way of an accounting, and many quarrels and lawsuits have resulted from the fact that legatees and heirs-at-law have not known the meaning of even the simple terms used in probate accounting. The incompetence of executors generally has become a matter of common knowledge.

§ 551. Increasing Importance of Subject

It seems needless to say that persons who are appointed to take care of estates should be acquainted with the proper manner of keeping their accounts so that when called upon to present statements of their transactions to the court for adjudication they will be able to give all required information in a plain and intelligible form. It seems equally evident that all persons interested in such matters should know enough of estate accounting to understand the records and statements relating to the administration. Today, however, the matter is of unusual importance, because estates are larger than ever before, and the work of the executor has increased proportionately in amount and complexity. More exact accounting is required by the courts now than formerly, and in the future still more precision will be required.

The reaching down of inheritance and transfer taxes to smaller estates and of the income tax to persons of less means is also tending to force a fuller handling of details upon fiduciaries as upon individuals—even more so, because the income tax returns required of fiduciaries are more complex than those required of individuals.

§ 552. The Legal Obligation to Account

There is a legal obligation on the part of an administrator or executor to keep proper accounts of the handling of money or other property placed in his care. Although the requirements of the different states vary in the specifications as to what is required of an administrator, these variances are not great and in no way affect the fundamental principles involved in the keeping of the accounts.

The law of most states does not prescribe any form of estate bookkeeping even where it does prescribe a form of final accounting. The courts are, however, inclined to hold that if the executor fails to keep books or keeps them in such a manner that it is impossible readily to prepare the final accounting, he may be charged personally with the expense of drawing off that account. For this reason it is especially desirable that the executor keep his current accounts in a way which will enable him to prepare his final accounting without difficulty and at the same time to handle his current work without unnecessary labor.

Although the laws are not usually explicit as to the manner in which estate accounts shall be kept, there are a large number of phrases used in the required reports which will be new to one who has had no dealings with probate work. There is less freedom allowed in probate than in ordinary commercial accounting, because in the latter case only the owners of the business need ordinarily be satisfied, while in the former the account must invariably be rendered to a court.

§ 553. General Principles of Estate Accounting

While it must be understood that there are no absolute rules that can be invariably followed in keeping the books of an estate, there are certain general principles which will apply equally to the accounts of estates of all sizes, whether in charge of administrators, executors, or trustees.

Fiduciary accounting stands alone in that the:

... idea of proprietorship is nearly or entirely absent, and
its place is taken by responsibility or accountability. It
always arises from delegated authority, the affairs being
placed under the control of some person as representative
of the actual owner whose object in keeping accounts is to
prove that he has faithfully administered them. . . .

...

The essence of fiduciary accounting is the ascertaining to what extent the person holding these delegated powers has fulfilled his duties and to what extent he is still accountable. He is charged with all property coming under his control, and he is discharged by any lawful disposal of it for the good of the estate.

§ 554. Separation of Corpus from Income Must Be Maintained It is important that the books show separately the principal and the income of an estate. There was a time when the distinction between corpus and income (see Chapter XXXV) was of interest only when a trust was created, but income and inheritance tax laws have made it of importance in the accounting of all estates. Inheritance taxes apply only to the principal; income taxes, from the viewpoint of the estate, apply only to the income. It must, however, be remembered that taxable income is not always exactly identical with income as opposed to corpus. (See § 315.)

Another need for the separation of principal and income is found when dower or curtesy rights enter into the handling of the estate property.

§ 555. All Assets Must Be Accounted For

The disposition of all assets, whether principal or income, must be shown in order to enable the representative to obtain his release. Especial care in this regard is necessary when the income is divisible among several beneficiaries during their lives, as in the event of the death of a beneficiary the income

Sprague, Philosophy of Accounts.

accrued to the date of his death belongs to the estate of such beneficiary and is payable as he may direct by will, or to his heirs if he dies intestate.

The importance of the executor's being able to show definitely the amount of the income belonging to a minor beneficiary is apparent, as the executor can be called upon by the minor, when he attains his majority, to account for the share of income from the estate to which he may have been entitled.

§ 556. Need of Full Explanations of Entries

The danger always exists with a person not trained in the keeping of accounts, that while the entries he may make are perfectly clear to him at the time, they will become "cold," as is said of stenographers' notes, and will be unintelligible after a short time has elapsed. Auditors know too well how great this failing is among even experienced bookkeepers who are not in the habit of having their books examined in detail and consequently fall into the habit of recording transactions without full explanation of the details, apparently on the theory that since they would not have made the entry if they had not known it was right, there is no need to bother about recording the facts in the case. Every bookkeeper learns sooner or later, if he continues in that occupation, that such a practice will not do, for the time always comes when the details underlying certain entries on the books must be known.

It is more essential that details be fully recorded in the case of an administrator or executor than in the case of the commercial bookkeeper, for the former is not employed because of any confidence in his ability as a bookkeeper, and is seldom chosen by the persons whose property he is handling. In fact he is too often looked upon by them with a certain antagonism rather than with favor. He must be especially careful, because the law, through the public desire to make sure that property left to heirs shall reach them safely, has