Executing an estate has many facets. It can be an emotional time for many. It involves a number of legal matters. And the executor must handle a variety of accounting tasks. What are some of these accounting jobs you'll need to ensure are complete and accurately done? Here are five of the most important to learn about.
1. Tracking all Income. Most estates will earn at least a little money from the assets before the estate is distributed to heirs. This could be anything from interest on bank or brokerage accounts to the profits from a small business or royalties. The executor will need to make sure every bit of income is included for all to see.
2. Documenting Expenses. The estate will also need to pay bills during the executor's tenure. These bills commonly include maintenance on hard assets like homes and vehicles, insurance premiums, services of accountants or lawyers, and fees for selling some assets. As an executor, you will be responsible for explaining all expenditures, so you'll need to keep receipts and documentation too.
3. Remitting all Taxes. The estate may owe some taxes before it's dissolved. Paying these in a timely manner prevents further legal problems or even the seizure of the estate's assets. And while things like property taxes are familiar to most executors, you may need professional tax preparation assistance for estate and inheritance taxes, capital gains taxes, and business income taxes.
4. Being Reimbursed. The executor, attorneys, and some other professionals can be paid for their work by an estate. But as an executor, you must be able to document any fees paid to yourself or those you hired to perform services. Any reimbursement for expenses should have detailed receipts. And you may need to show how you researched appropriate fees.
5. Reconciling Accounts. Reconciliation is the process of comparing your accounting records to the statement provided by outside institutions like banks and credit card companies. Reconciling shows that your bookkeeping is correct and that every dime has been accounted for. Reconciling a large account can be complicated, so you may need assistance.
Unfortunately for executors, estate bookkeeping is often very detailed and many interested parties — including the court — are watching you. The best way to discharge all these responsibilities is to work with an experienced accountant in your state. They can guide you through the best ways to handle these jobs and provide professional assistance with things like tax preparation and valuation. Call today to make an appointment.Share