Previously known as Birman & Ride

Blog

Passing of Accounts

An executor of a deceased estate has an obligation to the beneficiaries to account for their financial management of the estate. A beneficiary can require the executor to have the estate’s accounts scrutinised by the Supreme Court. This is known as ‘passing the accounts’.

Does an executor have to pass the accounts?

An executor only needs to pass the accounts if a beneficiary (or the Court) requires them to. However, an executor may want to complete the process to protect themselves from claims before finalising and distributing the estate. The advantage of doing so is that, once passed, the accounts are considered prima facie correct and the executor is released from further responsibility in relation to the accounts after the expiration of three years.

An alternative means for an executor to protect themselves from claims is to have the beneficiaries sign a Deed of Family Arrangement. However, an executor cannot compel beneficiaries to do this and absent cooperation, a passing of accounts is the next best option.

What is involved?

The executor needs to prepare and file the accounts in the form required by the Court (Form 4) and verify the accounts as correct by swearing an affidavit.

The Accounts will set out the monies the executor has received (receipts), the expenses and funds they have paid (disbursements), the remaining assets, and their plan to complete the administration. An executor will usually have to provide supporting documents (receipts, invoices, bank statements etc).

Beneficiaries can object to items in the accounts. The accounts are usually reviewed, and any objections dealt with, by a Registrar at a Court hearing, who essentially acts as an auditor and has the power to disapprove any expenses if they were not reasonably incurred.

This can also be an opportunity to resolve disputes between co-executors. For example, an executor may have incurred legal fees that a co-executor refuses to reimburse from the estate. The Registrar can usually resolve such disputes at the hearing.

Timeframes

The Court Rules contemplate the accounts being passed within 12 months of the grant of representation being issued, but this is not a firm rule. It is usually sensible to pass the accounts after the estate has been largely administered and is awaiting final distribution.

Costs

Provided an executor acts reasonably, they are usually entitled to be reimbursed from the estate for the cost of having the accounts passed. The Registrar has a discretion as to whether the costs of any objecting parties should be paid from the estate.

Failure to pass the accounts

If the executor does not pass the accounts when required to, the Court can ultimately remove them from their position.

Facebook
Twitter
LinkedIn

Related posts

No. Funds held on trust by law firms are strictly regulated. Banks are required to pay any interest earned on funds held in trust……
A common question for an executor or the administrator of an estate is – who pays for legal costs I incur? It’s an important……
Superannuation is dealt with under complex rules and is usually not dealt with by a person’s Will, or under intestacy laws (i.e. when a……
Popular Posts

Make an appointment

Arrange a consultation with one of our friendly and experienced team members.

Let us contact you

We will respond to your online enquiry within two business days.

This site is protected by reCAPTCHA and the Google Privacy Policy and Terms of Service apply.