Why Trust and Estate Accounts should be prepared

Personal Representatives (PRs) and Trustees, when called upon by their Beneficiaries to do so, are under a legal obligation to give an account of their stewardship of the funds for which they are responsible.

In particular, the obligation of PRs (the expression covers both Executors and Administrators) is set out in section 25 of the Administration of Estates Act 1925, as amended by section 9 of the Administration of Estates Act 1971. This states that the duties of PRs are:

a) collect, get in and administer according to law the real and personal estate of the Deceased;

b) when required to do so by the Court, exhibit on oath a full inventory of the estate and when so required render an account of it to the Court; and

c) when required to do so by the High Court, deliver up the Grant of Probate or Administration to that Court.

There is therefore a statutory duty to account for the administration of an estate.

The preparation of Accounts is also a matter of sound practice. Accurate records are necessary for the purpose of ensuring that all assets have been properly accounted for, liabilities have been duly discharged and the different Beneficiaries have duly received that to which they are entitled and no more. Except in the smallest and simplest of cases, this would be impossible without the maintenance of accurate accounting records. Accurate Accounts are also very helpful as a means of providing the information required to complete Trustee’s and PRs tax returns.

All Trustees and PRs are not merely entitled, but have a duty to see and approve statements of Account before they are sent to Beneficiaries.

If you have any questions please contact our Wills, Lasting Powers of Attorney, Trusts and Probate department either Angela Pelleschi or Emma Beckhurst on 01489 885 788 or by email apelleschi or ebeckhurst