Charges must equal credits
US estate accounts such as Virginia's form CC-1680 are built on one idea, often called charge and discharge. The executor is charged with the property at the date of death, plus everything received since and any gains on sales. The executor is credited with every disbursement, any losses on sales, every distribution to a beneficiary and the property still on hand. The two totals must be equal. If they are not, something is missing or entered twice.
Property is carried at its value at death (or what the estate paid for it). A sale shows a gain or loss against that value, which is how the two sides stay equal when prices move.
Steps for the final accounting
- Schedule A: list every asset at its date-of-death value, from the inventory.
- Schedule B: list every receipt since death, with its date and source: interest, dividends, refunds, other money in.
- Schedule C: for each asset sold or distributed, the net proceeds or value against its value at death.
- Schedule D: every payment, with date, payee and purpose: debts, funeral, court fees, attorney and executor fees, taxes.
- Schedule E: every distribution to a beneficiary, in cash or in kind.
- Schedule F: what is still on hand, at carrying value and today's value.
- Check the summary balances, then show how the property on hand will be split.
An informal accounting to the heirs can use this layout as it is. An account filed with a probate court must be on that court's own form, with its own schedules and verification, so treat this as the working that feeds the form.
Worked example: the Pennsylvania model estate account
Pennsylvania's Orphans' Court rules publish a model first and final account for the estate of John Doe. Entered into the builder, it reproduces the model's figures: principal receipts of $160,488.76, net gain of $2,662.00, $1,910.89 in cash and $87,419.22 on hand at carrying value. Income and principal are combined below; the model keeps them apart, as Pennsylvania's rules require.
First and final account
Estate of John Doe, who died on Nov 14, 2005
Executor or administrator: William C. Doe, Executor
Accounts to Nov 30, 2006
Summary of account
| Charges | |
|---|---|
| Property at date of death (Schedule A) | $150,278.46 |
| Receipts (Schedule B) | $12,723.70 |
| Gains on sales or other dispositions (Schedule C) | $3,662.00 |
| Total charges | $166,664.16 |
| Credits | |
| Disbursements (Schedule D) | $23,280.21 |
| Losses on sales or other dispositions (Schedule C) | $1,000.00 |
| Distributions to beneficiaries (Schedule E) | $54,964.73 |
| Property on hand (Schedule F) | $87,419.22 |
| Total credits | $166,664.16 |
| Difference (the account balances) | $0.00 |
Show schedules A to F and the proposed distribution
Schedule A: Property at date of death
| Residence, 86 Norwood Road, Philadelphia | $50,000.00 |
| 50 sh. Best Oil Co. | $5,000.00 |
| 1,000 sh. Central Trust Co. (half of holding after 2-for-1 split) | $25,425.00 |
| 1,000 sh. Central Trust Co. (other half) | $25,425.00 |
| 35 sh. Electric Data Corp. | $437.50 |
| 116 sh. Electric Data Corp. | $1,450.00 |
| 100 sh. Home Telephone & Telegraph Co. | $12,500.00 |
| 100 sh. Home Telephone & Telegraph Co. (now 200 after split) | $12,500.00 |
| 200 sh. XYZ Corporation (value on audit) | $10,000.00 |
| Antique chair | $55.00 |
| Antique highboy | $2,000.00 |
| Antique side table | $60.00 |
| Pearl necklace | $515.00 |
| 50 sh. Fabulous Mutual Fund | $1,833.33 |
| Cash in possession of decedent | $42.54 |
| First National Bank checking | $516.93 |
| Prudent Savings Fund Society savings | $2,518.16 |
| Total property at date of death | $150,278.46 |
Schedule B: Receipts
| Income: interest, dividends, rent | |
|---|---|
| Jan 15, 2006 Central Trust dividend | $600.00 |
| Feb 1, 2006 Home Telephone dividend | $225.00 |
| Mar 30, 2006 Electric Data dividends | $30.20 |
| Jun 29, 2006 Treasury Bond interest less accrued interest paid | $125.00 |
| Sep 12, 2006 Fabulous Mutual Fund dividends | $140.00 |
| Sep 28, 2006 Electric Data dividends | $23.20 |
| Oct 2, 2006 Best Oil dividends | $20.00 |
| Oct 15, 2006 Central Trust dividends | $900.00 |
| Nov 1, 2006 Home Telephone dividends | $450.00 |
| Refunds and other receipts | |
| Feb 22, 2006 Best Oil rights to subscribe sold | $50.00 |
| Mar 12, 2006 Fabulous Mutual Fund capital gains dividend | $32.50 |
| May 11, 2006 Refund of 2005 U.S. income tax | $127.80 |
| Sep 25, 2006 From ancillary administrator, oil and gas leases | $10,000.00 |
| Total receipts | $12,723.70 |
Schedule C: Gains and losses on sales or other dispositions
| Line | Gain | Loss |
|---|---|---|
| Mar 15, 2006 1,000 sh. Central Trust Co. (half of holding after 2-for-1 split): net proceeds $27,467.00, value at death $25,425.00 | $2,042.00 | |
| May 21, 2006 35 sh. Electric Data Corp.: net proceeds $530.00, value at death $437.50 | $92.50 | |
| Feb 7, 2006 100 sh. Home Telephone & Telegraph Co.: net proceeds $14,025.00, value at death $12,500.00 | $1,525.00 | |
| Mar 15, 2006 200 sh. XYZ Corporation (value on audit): net proceeds $9,000.00, value at death $10,000.00 | $1,000.00 | |
| Jul 20, 2006 $10,000 U.S. Treasury Bonds 3% due 07/01/2009: net proceeds $10,000.00, cost $9,997.50 | $2.50 | |
| Totals | $3,662.00 | $1,000.00 |
| Net gain | $2,662.00 |
Schedule D: Disbursements
| Funeral expenses | |
|---|---|
| Jan 10, 2006 Smith Funeral Home | $1,200.00 |
| Feb 15, 2006 Jones Memorials, grave marker | $175.00 |
| Debts of decedent | |
| Jan 25, 2006 John T. Hill, M.D. | $250.00 |
| Jan 25, 2006 Thomas Pharmacy | $23.82 |
| Feb 1, 2006 Sanders Hardware | $56.00 |
| Apr 12, 2006 PA Department of Revenue, final income tax | $156.00 |
| Court and probate fees | |
| Nov 14, 2005 Register of Wills, probate fees | $72.00 |
| Fees and commissions | |
| Nov 16, 2006 Guardian ad litem fee | $375.00 |
| Nov 16, 2006 Executor's compensation | $6,314.64 |
| Nov 16, 2006 Attorney's fees | $5,000.00 |
| Nov 16, 2006 Executor's income commission | $125.67 |
| Administration expenses | |
| Feb 22, 2006 Appraisal of jewelry and antiques | $50.00 |
| Nov 16, 2006 Arden, Miles & Solomon, disbursements | $72.25 |
| Estate and inheritance taxes | |
| Feb 12, 2006 PA inheritance tax on account | $2,000.00 |
| Aug 13, 2006 PA inheritance tax balance | $396.07 |
| Aug 13, 2006 Federal estate tax | $2,663.29 |
| Nov 23, 2006 Federal estate tax deficiency and interest | $513.63 |
| Total estate and inheritance taxes | $5,572.99 |
| Other taxes | |
| Nov 15, 2006 Fiduciary income tax (capital gains) | $283.84 |
| Nov 15, 2006 Fiduciary income tax (income) | $53.00 |
| Other disbursements | |
| May 15, 2006 Family exemption, Janet Doe | $3,500.00 |
| Total disbursements | $23,280.21 |
Schedule E: Distributions to beneficiaries
| To Janet Doe | |
|---|---|
| Dec 1, 2005 Pearl necklace (in kind) | $515.00 |
| Dec 1, 2005 Antique highboy (in kind) | $2,000.00 |
| Dec 1, 2005 Antique side table (in kind) | $60.00 |
| Dec 1, 2005 Antique chair (in kind) | $55.00 |
| Dec 1, 2005 Residence, 86 Norwood Road, Philadelphia (in kind) | $50,000.00 |
| To Sharon Doe | |
| Nov 16, 2006 Income distribution | $1,167.36 |
| To William C. Doe, Trustee for Walter Doe | |
| Nov 16, 2006 Income distribution | $1,167.37 |
| Total distributions | $54,964.73 |
Schedule F: Property on hand
| Line | Carrying value | Market value |
|---|---|---|
| Cash | $1,910.89 | $1,910.89 |
| 50 sh. Best Oil Co. | $5,000.00 | $4,500.00 |
| 1,000 sh. Central Trust Co. (other half) | $25,425.00 | $32,168.76 |
| 116 sh. Electric Data Corp. | $1,450.00 | $1,684.00 |
| 100 sh. Home Telephone & Telegraph Co. (now 200 after split) | $12,500.00 | $16,000.00 |
| 50 sh. Fabulous Mutual Fund | $1,833.33 | $4,016.17 |
| $40,000 U.S. Treasury Bills due 12/14/2006 | $39,300.00 | $39,300.00 |
| Total property on hand | $87,419.22 | $99,579.82 |
Investments bought
| Feb 1, 2006 $10,000 U.S. Treasury Bonds 3% due 07/01/2009 | $9,997.50 |
| Sep 14, 2006 $40,000 U.S. Treasury Bills due 12/14/2006 | $39,300.00 |
| Total investments bought (for information, already in Schedules C and F) | $49,297.50 |
Proposed distribution of property on hand
| Property on hand | $87,419.22 |
| Left for the residuary beneficiaries | $87,419.22 |
Residue split between the beneficiaries
| Line | Share | Paid so far | Still due |
|---|---|---|---|
| Sharon Doe (1/2) | $44,876.98 | ($1,167.36) | $43,709.62 |
| William C. Doe, Trustee for Walter Doe (1/2) | $44,876.97 | ($1,167.37) | $43,709.60 |
| Total | $89,753.95 | ($2,334.73) | $87,419.22 |
Copying the totals onto Virginia's form CC-1680
Virginia's account for a decedent's estate has ten summary lines. Lines 5 and 10 must be equal. With the model account's figures:
| Line | On the form | Amount |
|---|---|---|
| 1 | Beginning assets | $150,278.46 |
| 2 | Receipts | $12,723.70 |
| 3 | Gains on asset sales | $3,662.00 |
| 4 | Adjustments | $0.00 |
| 5 | Total of 1 to 4 | $166,664.16 |
| 6 | Disbursements for debts and expenses | $23,280.21 |
| 7 | Losses on asset sales | $1,000.00 |
| 8 | Distributions to beneficiaries | $54,964.73 |
| 9 | Assets on hand | $87,419.22 |
| 10 | Total of 6 to 9 | $166,664.16 |
Line 1 takes only property in Parts 1 and 3 of your Virginia inventory. Line 4 is for corrections to the inventory; the builder puts corrections straight into the values, so it stays at zero.
Questions about estate accountings
What is the difference between an informal and a formal accounting?
An informal accounting goes straight to the beneficiaries, who can approve it without a court. A formal accounting is filed with the probate court on the court's own form and examined there. Which one you need depends on your state and your estate, so ask the court clerk or an attorney.
What is carrying value?
The value an asset is carried at in the account: its value at the date of death, or what the estate paid if it was bought later. Gains and losses on sales are measured against it. Schedule F also shows today's value for information.
Do I include the house if it went straight to a beneficiary?
If it was part of the probate estate, yes: it is in Schedule A at its value at death and in Schedule E as a distribution in kind. In the model account the residence goes to Janet Doe that way.
Does Pennsylvania require income and principal to be shown separately?
Yes. Pennsylvania's Orphans' Court Rule 2.1 says accounts follow the model accounts and keep principal and income apart unless the court orders otherwise. This builder separates income only on the receipts side, so split income expenses and income distributions yourself for a Pennsylvania filing.
Does the account have to show every transaction?
For a court account, usually yes: Pennsylvania's rule asks for the date of every receipt, disbursement and distribution, its source and who was paid. Keep the bank statements and receipts to back up each line.
Sources: Pennsylvania Model Estate Account and Orphans' Court Rule 2.1; Virginia Form CC-1680. The model account's purchase of bonds on Feb 1, 2006 comes before the sales that paid for it, so the builder flags a dip below zero on that date. Court-filed accountings must use the court's own form. This is not legal or tax advice.