When an individual dies, someone has to be appointed to handle the affairs of his estate.  If a person dies with a last will and testament, then the decedent typically nominated someone to handle the affairs of his estate.  The person nominated to handle the estate is called the executor.  If a person dies without a last will and testament, then the person appointed to handle the affairs of the decedent’s estate is called the administrator.

For all intents and purposes, the role of executor and administrator are identical and for purposes of this discussion will be called an executor. An executor is a fiduciary, meaning that an executor is held to a very high standard of care when dealing with the affairs of the estate.

The executor must ensure that all the assets of the estate are gathered together. He must ensure that all of the debts of the estate are paid.  After all the assets of the estate are collected and all the debts of the estate are paid, the executor must account to the beneficiaries of the estate, if the beneficiaries want an accounting.  After the accounting is approved, the executor must distribute the assets of the estate to the beneficiaries.

The executor has the right to hire an attorney and other professionals to assist him with his duties. The executor can pay the fees these professionals charge from the assets of the estate.

Before an executor distributes the assets of the estate to the beneficiaries, he should always obtain a release from the beneficiaries. The release is an acknowledgement from the beneficiary that the executor faithfully performed his obligations as executor and an agreement to refrain from taking any action against the executor for an alleged breach of the executor’s duties.

If an executor fails to obtain a release from the beneficiaries, then the beneficiary could sue the executor for an alleged breach of the executor’s duty to the beneficiary. If the executor releases the assets of the estate to the beneficiaries before obtaining a release, then the executor has little leverage over the beneficiaries with which to obtain releases.

Many times, an executor will circulate an accounting to the beneficiaries and ask them to sign a release. Once releases are obtained from each of the beneficiaries, the executor will distribute the assets of the estate to the beneficiaries.

If a beneficiary refuses to sign the release, then the executor has the right to file his accounting with the court and obtain court approval of his accounting. Obtaining court approval of an accounting could cost an estate many thousands of dollars in fees.

With most estates, the beneficiaries are the spouse of the decedent and the children of the decedent. In most instances, these individuals get along and trust one another. The beneficiaries also frequently know what assets the decedent owned and know, approximately, what debts the decedent owed.

Given this trust and knowledge, most beneficiaries do not want the executor to account for his actions with the assets of the estate. They have a fair knowledge of what an accounting will tell them, so there is no reason for the executor to account to them.

Sometimes, this is not the case. Sometimes, the beneficiaries do not have a good relationship with the executor.  The beneficiaries might not trust the executor and might believe that the executor is hiding assets from them.

There is no doubt that the beneficiaries have a right to an accounting. There are statutes and court rules concerning an executor’s obligation to account to the beneficiaries of the estate.  A well-drafted accounting can tell the beneficiaries a lot about the financial affairs of the estate—the assets the decedent held, the changes that have occurred in those assets since the decedent’s death, and the liabilities that the executor paid with the assets of the estate.

On the other hand, beneficiaries should bear in mind that accountings cost money to compile. An executor will probably retain the services of an attorney to draft the accounting.  The time the lawyer spends on the accounting will be billed to the estate, which, for all intents and purposes, means that the beneficiaries are paying for the accounting.

One of the first questions I ask a client who is the executor of an estate is, “Do you get along with the beneficiaries?” As with many things in the law, the working relationship of the parties often determines the amount of legal fees that will be expended.