Preparation and Filing of the Account
ACCOUNTING TO THE COMMISSIONER
Every personal representative is obligated to account to the Commissioner of Accounts for his/her financial actions in the administration of an estate, unless waived by the Clerk of the Court in the qualification order. If the estate has tangible or intangible assets in excess of $25,000.00, or you have power of sale over real estate, you are required to account.
May I File a Statement in Lieu of a Final Account?
There are some instances in which the accounting obligation is limited due to the fact that the personal representative(s) (administrator/executor) is(are) the sole residuary beneficiary(ies). In these circumstances alone, a Statement in Lieu of a Final Account (Form CC-1681) may be filed by the fiduciary along with a Tax Certificate certifying there are no unpaid estate taxes due. This statement in lieu of a final account may be signed and filed six (6) months from the date of qualification and must be filed within sixteen (16) months of the date of qualification.
If the estate is not ready to be settled, a Statement of Intent to file a Statement in Lieu of a Final Account (SOI) is filed as an interim account within sixteen months, and annually thereafter until the Statement In Lieu of a Final Account can be filed.
NOTE: If the residuary beneficiary of the estate is a trust, a Statement In Lieu of a Final Account may not be filed. A full account is required.
ALSO NOTE: If you might ordinarily qualify for the filing of a Statement In Lieu of a Final Account, but the estate is insolvent (unable to pay all creditors in full), a full account must be filed and the Statement In Lieu of a Final Account may not be used. Be sure to consult Section 64.2-528 , Code of Virginia, before the payment of any creditors if the estate is insolvent. Better yet, consult with an estate attorney !
Where is the Statement in Lieu of Final Account Filed?
It is filed with Henrico County Commissioner of Accounts within sixteen (16) months from the date of qualification in triplicate ,with the tax certificate, and with a check payable to the Commissioner of Accounts in the sum of $91.00 (this includes the clerk’s filing fee). This fee is set by the Code of Virginia which should be consulted to determine if there has been any change. Section 64.2-1314, Code of Virginia (1950), as amended. A tax certificate must accompany the Statement in Lieu of a Final Account. (see forms).
Accounts to be Filed by All Other Personal Representatives.
For those estates where a Statement in Lieu of a Final Accounting cannot be used, which is the majority of estates, a complete accounting of all financial transactions conducted by the personal representative , on 12 month accounting intervals, is required. Form CC-1680 is the proper accounting form to be filed by every fiduciary handling the administration of an estate except as previously stated. At the time of qualification, you were given this form along with Form CC-1680 (INST) which gives the instructions for the completion of the account. The instructions are very specific and very helpful in the proper completion of the account. Also given to you was Form CC-1680 (SAMP) which is a sample accounting for a decedent’s estate.
Please note that these forms are required to be used on estate accountings unless approved otherwise by the Commissioner of Accounts, in advance.
Also please note that the completion of the account summary page (Form CC-1680) by itself is unacceptable and will be returned to you by the Commissioner’s office.
The summary sheet shall be accompanied by itemized listings in each of the categories listed on the account summary. For example, Item 1 designates the beginning assets on the account. An attached sheet should list all of the beginning assets individually with the total being entered on the account summary line 1. The same would be true with receipts. A total amount representing all of the receipts during the accounting period is totally insufficient for an audit of the accounting. An attached list shall identify each receipt by date, source and amount. The same is true with each category under the account summary for which you have an entry.
An attached list must accompany the summary for each of those categories for which you have an entry on the account summary.
THE ACCOUNT PERIOD:
WHILE YOU HAVE SIXTEEN (16) MONTH PERIODS TO FILE THE FIRST AND SUCCESSIVE ACCOUNTS, THE PERIOD OF EACH ACCOUNT SHALL NOT EXCEED TWELVE (12) MONTHS.
YOU MAY NOT FILE AN ACCOUNT FOR A PERIOD IN EXCESS OF 12 MONTHS WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER. THE EXTENSION OF THE 12 MONTH ACCOUNTING PERIOD WILL RARELY BE GRANTED , AS THE EXTENSION PLACES AN INCREASED BURDEN ON THE AUDITOR OF THE ACCOUNT THAT IS NOT CONTEMPLATED BY THE STATUTE AND THE WORKLOAD DEMANDS OF THE COMMISSIONER'S OFFICE.
IF YOU FILE AN ACCOUNT WHICH EXCEEDS THE STATED ACCOUNTING PERIODS, THE ACCOUNT WILL GENERALLY BE RETURNED TO BE RESTATED FOR THE PROPER PERIOD OF TIME.
IF THE COMMISSIONER ACCEPTS AN ACCOUNTING FOR AN EXTENDED ACCOUNTING PERIOD, THE COMMISSIONER'S FEES FOR THE EXTENDED PERIOD WILL BE PRORATED, RESULTING IN ADDITIONAL FILING FEES.
PRACTICAL INSTRUCTIONS TO COMPLETE THE ACCOUNT
Line 1: Beginning Assets
The assets under your control as executor or administrator are listed on a schedule to be attached to the account summary and the total is entered on line 1 of the account summary, If the account is the first account the beginning assets will be the same assets shown in parts 1 and 3 from the inventory. If the account is a second or subsequent account the beginning assets will be the same as the ending assets from the prior account.
Line 2: Receipts
Enter as itemized entries, by date, payor and amount, all receipts to the estate received during the accounting period. This would include refunds, interest on deposits, dividends, capital gains, tax refunds or other income receipts.
If dividends are automatically reinvested under a dividend reinvestment program rather than being deposited to the estate bank account or brokerage cash account, they are listed as receipts and the additional shares purchased with the dividends are added to the assets on hand at the end of the account (Line 9) at the number of shares purchased and the purchase price becomes the carrying value of those added shares.
AFTER DISCOVERED ASSETS
“Receipts” does not include after discovered assets which were not reported on the inventory. Such after discovered assets are reported under line 4 adjustments if they are less than $25,000.00. If the after discovered assets are $25,000.00 or more, an Amended Inventory must be filed stating the after discovered assets and paying the additional probate tax due on the added probate value.
Line 3: Gains on Asset Sales
Gains on asset sales would represent a change in value based on the disposition of an asset. For example, if an automobile was listed for $5,000.00 on the inventory and it was sold for $6,000.00, you would show a gain of $1,000.00. Likewise, under category 7 “Losses”, if that automobile sold for $4,000.00 you would show a loss of $1,000.00. Please note that changes in market value are not reflected on the accounting except at the very end where the market value of assets on hand is shown. You do not need to adjust for changes in market value unless the asset is sold. If you have 100 shares of Exxon stock at $10.00 per share, that carrying value of $1,000.00 will carry all the way through each accounting until the asset is sold and a gain or loss is reported, or until the asset is distributed to a beneficiary in kind, at which time it is distributed at its carrying value for purposes of the accounting. For example, if 100 shares of Exxon at $10.00 per share were listed on the inventory, the carrying value would be $1,000.00. If those shares were sold by you as fiduciary and you obtained $20.00 per share at the time of sale, a gain of $1,000.00 would be shown. Likewise, any loss would be shown if they were sold for less than $10.00.
If the shares are distributed equally to two beneficiaries under the will, they would be shown as 50 shares to John Doe at $10.00 per share (the carrying value) and 50 shares to Jane Doe at $10.00 per share (the carrying value) and not at the market value. Please be careful, however, if you are distributing different stocks to different beneficiaries as the market value of the stocks at the time of distribution will need to be considered in making distributions as well as the nature of the stocks being distributed.
Line 4: Adjustments
Line 4 is to add or delete items not shown or improperly shown on the Inventory. For example, if after filing the inventory a certificate of deposit was discovered to be owned by the decedent, it would be listed as an adjustment (addition) under the accounting. Likewise, if a certificate of deposit was initially listed under the inventory as owned by the decedent and was determined after the filing of the inventory to have been payable on death to a named beneficiary, it would be deleted as a negative adjustment on line 4. If adjustments total $25,000.00 or more as an increase to the estate, you are required to file an amended inventory and may not make the adjustment on line 4 of the accounting. Adjustments totaling less than $25,000.00 may be made on the accounting on line 4.
Line 5: Enter the total of Lines 1, 2, 3 and 4.
Line 6: Disbursements for Debts & Expenses
Disbursements for debts and expenses represents the largest area of problems with accounts and results in a substantial number of disapprovals of accounts.
Each disbursement for a debt or expense of the estate must be itemized by date, payee, purpose of the disbursement and exact amount of the disbursement. All disbursements must be documented with an invoice, a copy of the cancelled check (the front of the check if it was returned as part of the monthly bank statement ), or a copy of both sides of the cancelled check if not returned as part of your monthly bank statement.
Disbursements from the estate should be made by check and not by cash withdrawal from the estate account. If you do not have invoices, paid receipts, and proper copies of cancelled checks for disbursements made from the estate, these disbursements will not be allowed and you will be personally responsible for the repayment of those sums to the estate.
It is critical that you keep all documentation dealing with the estate. This includes monthly bank statements, stock brokerage statements, correspondence, receipts, bills, evidence of payment, joint account signature cards, deeds or life insurance policies with survivorship designations or any other form of documentation. You will save a lot of time if you keep these items well organized so that they can be presented to the Commissioner’s office in a complete and organized manner.
Line 7: Losses on Asset Sales
Just as gains were shown on the sale of an asset of the estate, if the disposition (sale) of the asset results in a loss from the value shown on the inventory, the loss is entered on line 7. Please see the explanation under Line 3 above. The loss would be shown as follows:
100 shares Exxon at $10.00/share on inventory.........$1,000.00
100 shares Exxon sold at $5.00/share..................$ 500.00
Loss on asset sale....................................$ 500.00
Line 8: Distributions to Beneficiaries
Distributions are the payments made to beneficiaries of the estate. Distributions to beneficiaries present additional problems because once the distributions are made, it is almost impossible to recover those back if they have been improperly made. For testate estates, the will dictates the distribution to beneficiaries and should be followed in every instance.
Any distribution which is at variance with what is stated in the will (or contrary to intestacy laws if the decedent had no will) is made at the risk of the personal representative. For example:
a. If you as personal representative believe the decedent wished to make a contribution to a church or charity, but that was not expressed in the will, making such a contribution is inappropriate and will not be approved, unless there is a written agreement signed by all affected beneficiaries. Such statement must be notarized.
b. "By-Pass" distributions to beneficiaries of a trust which is the residuary beneficiary under the will, are not acceptable unless specifically allowed under the terms of the decedent's will, or preapproved by the Commissioner. Where the residuary beneficiary under the will is a trust under agreement established by the decedent during his/her lifetime, distributions must be made to the trustee of the trust, even though immediate distribution of the trust assets by the trustee is permitted by the terms of the trust under agreement. The Commissioner's office has no jurisdiction over the administration of trusts under agreement and we therefore do not become involved in analyzing those trust terms and approving direct distributions by the executor to the trust beneficiaries rather than to the trustee(s) as beneficiaries under the will.
If you make by-pass distributions contrary to these instructions, you
must present a full copy of trust under agreement to the Commissioner
for review, plus a notarized certification by the trustee: (i) that the persons
to whom distribution has been made directly by the executor were
immediately entitled to distribution upon receipt of the distribution
intended for the trust, and (ii) a directive to the executor to make direct
distribution to specific beneficiaries in specific amounts. If the distributions
are contrary to the trust under agreement provisions, they will not be approved.
An additional review fee of $150.00 is payable to the Commissioner's office.
Any administration of the estate which is contrary to intestate law or the stated directions of the decedent in the will must be agreed to in a writing signed by all affected beneficiaries before a notary public, otherwise the personal representative is liable for the wrongful distribution, no matter how well intended. If the decedent gave verbal instructions to the proposed executor or administrator to "give each of the grandchildren $5,000", but such direction was not part of the will, the distribution to the grandchildren is improper, will be disapproved and the executor or administrator will have to personally repay such distributions to the estate for distribution to the proper beneficiaries.
c. "In Kind Distributions". Be very careful to distribute the estate by market value on the date of distribution, if you are distributing stocks, bonds or other securities "in kind" among multiple beneficiaries. This is generally not a problem if you are distributing equal numbers of shares of each stock to the beneficiaries. However, if there are unequal distributions of the same stock, or one beneficiary is getting one company and the other beneficiary receiving a different company's stock (which is a non-preferred practice), the market value on the date of distribution must be used rather than the inventory (carrying) value. If you are unsure of this requirement, please consult with an estate attorney or cpa for advice.
NOTE: If you are shipping personal property bequeathed to a beneficiary (i.e. furniture, china, crystal, jewelry etc.) be sure to have a clear understanding with the beneficiary as to who bears the risk of loss or damage during shipment. Unless the shipment is insured (at additional cost), the loss or damage during transport results in a loss of what was intended to be left to the beneficiary. It is strongly recommended that you arrange for the beneficiary to pay the cost of insurance on the items being delivered, and if the beneficiary does not want to pay that cost, obtain a letter from the beneficiary declining such coverage and agreeing to assume the risk of transport. Normally the estate would not be obligated to insure the items as an expense of administration, so it is vital that all parties affected understand that the risk of shipping is on the beneficiary.
It is further suggested that if a beneficiary cannot pick up the items bequeathed, that the beneficiary be the one who makes all arrangements for shipping, at his/her expense (unless the will says otherwise), thus leaving the consequences of a loss during shipping between the beneficiary and the carrier.
Proof of Receipt of Distribution
Receipts must be presented to the Commissioner of Accounts for all distributions to beneficiaries. By statute, a proper receipt for monetary distributions to beneficiaries includes a copy of the front of the cancelled check which was returned with the monthly bank statement. However, in almost all cases the Commissioner will require copies of both sides of the cancelled checks to beneficiaries which show an endorsement by the beneficiary, or in the alternative a notarized receipt for the distribution.
This notarized receipt requirement applies to distributions of tangible personal property as well as monetary distributions (if a proper copy of both sides of the cancelled check to a beneficiary is not presented).
Note that the carbon copy of a cashier’s or bank check, or copy of an uncashed check are not evidence of payment and will not be accepted by the Commissioner’s office.
A sample receipt for tangible personal property or monetary distributions is included with the estate forms. (Sample Beneficiary Receipt)
Intestate estate distributions can be especially problematic. Unless you are certain as to the proper intestate beneficiaries of an intestate estate (without a will), it is strongly recommended that you consult with an estate administration attorney to obtain advice as to the proper distribution of the estate. The Code of Virginia specifies who inherits under an intestate estate. Section 64.2-200 and following sections, Code of Virginia (1950), as amended.
Distributions to Minors
Distributions generally cannot be made directly to beneficiaries under the age of eighteen (18). The payment may be made and a proper receipt received in one of the following ways:
a. In an intestate estate, or a testate estate where there is no prohibition against this manner of distribution, payment of a distribution due to a minor which does not exceed $25,000.00 may be made to a Custodian under the Uniform Transfers to Minors Act (UTMA)(Section 64.2-1900, and following sections, Code of Virginia (1950), as amended.) A receipt from the Custodian is required as provided by Section 64.2-1900, Code of Virginia, plus evidence of the establishment of the UTMA account.. (Caveat: The entire distribution due to the minor cannot exceed $10,000.00);(see the two part receipt in the form section).
b. Payment of sums in excess of $25,000.00 are made to a properly Court qualified Guardian of the Property of a Minor, with a receipt from that Guardian;
c. Payment to the named trustee is required if the minor's distribution is designated to be held in trust until the minor reaches a specified age, with a receipt from the Trustee of the minor's trust. You may not disregard a trust provision for a minor and make distribution under the Uniform Transfers to Minors Act;
d. If the will specifically provides for, or incorporates by reference the statutory fiduciary powers of Section 64.2-105, Code of Virginia (1950), as amended, payment of sums in excess of $25,000.00 due to a minor may be made to a Custodian under the provisions of the Uniform Transfers to Minors Act (Section 64.2-1900, Code of Virginia), or Uniform Custodial Trust Act (Section 64.2-900, Code of Virginia), with a receipt from the Custodian. (Consult the referenced Code sections for the specifics and limitations of this form of distribution);
e. Caution: If in doubt about the method of distribution call the Commissioner's office for guidance.
f. Also Note: You may not delay distribution due to a minor to a later date than is required by law because you feel the minor (now age 18) is not "ready" to handle the money. If the minor is entitled to the distribution at age 18, the minor gets it at that age irrespective of his/her immaturity or financial "capabilities", unless the Court determines some disability exists and enters an order delaying distribution.
Distributions to Incarcerated Beneficiaries
Often a beneficiary is convicted of a felony and incarcerated at the time of distribution and for a period of time into the future. If so payment of his distribution may be made is one of the following ways:
a. Payment to a "Committee" or "Guardian" appointed by the Circuit Court upon petition filed by the personal representative or other person willing to serve in such capacity, with the Committee's/Guardian's receipt, or,
b. With prior approval of the Commissioner of Accounts, payment to a duly appointed Attorney in Fact under a duly executed and recorded specific power of attorney authorizing the receipt by the attorney in fact of the distribution. An Alive and Well Affidavit along with the original recorded Power of Attorney and receipt of the Attorney in Fact for the distribution will have to be presented to the Commissioner's office with the account; or,
c. Payment of the distribution to the Clerk of the Henrico County Circuit Court pursuant to a Petition and an Order of the Court auithorizing such payment. A receipt will be provided by the Clerk's office upon payment of the distribution to the Clerk as provided in the Order. (You will need the services of an attorney to make the necessary filing with the Court). Note: The costs of paying a distribution into court under a court proceeding are to be deducted from the distribution and not paid from the residuary estate.
Certain statutory rules apply which often present difficulties for personal representatives in making proper distributions to beneficiaries of testate and intestate estates. If you have any question as to whether or not a distribution is proper, it is best that you obtain the advice of counsel before making a wrong distribution. In the event that the distribution you make is improper, and you are unable to recover the funds, you are personally liable for that improper distribution.
The same receipts will be required in intestacy as required in testate estates.
Line 9: Assets on Hand
If the account is a final accounting you will have zero assets on hand as all debts and administration expenses will have been paid and distributions will have been made, and you will enter a zero on line 9. You must present to the Commissioner, with your account, all bank statements and a final bank statement showing a zero balance.
If the account is not a final accounting you will list, on an attached schedule, all assets still remaining as part of the estate. They are individually listed by carrying value( the inventory value or value at which you acquired the asset if purchased during the administration of the estate) and below line 10 you will show the current market value (using the same tax assessed value for real estate).
Line 10: Enter the total of lines 6, 7, 8 and 9.
LINES 5 AND 10 MUST BE IDENTICAL. OTHERWISE YOUR ACCOUNT DOES NOT BALANCE.
Documentation In Support of the Account
You must provide paper documentation of all transactions reported on the account. Copies of each months bank statement, copies of cancelled checks (front and back unless received as a part of your monthly bank statement), brokerage statements for the entire accounting period, invoices or receipts for all disbursements, notarized receipts and/or cancelled checks for distributions to beneficiaries and evidence of the value of assets on hand at the end of the accounting period must be presented with the account.
Data stored on electronic media cannot be submitted as proper documentation.
Commissioners' Fee Schedule and Clerk of Court's Filing Fees to be paid for Accounts:
First Account: Based on Assets from the Inventory and Additions (receipts, capital gains and adjustments):
0- $ 50,000...............................$ 200 plus Clerk's fees
50,001- 100,000................................ 400 plus Clerk's fees
100,001- 200,000................................ 500 plus Clerk's fees
200,001- 300,000................................ 600 plus Clerk's fees
300,001- 500,000................................ 750 plus Clerk's fees
500,001- 700,000................................ 900 plus Clerk's fees
700,001- 1,000,000................................ 1,200 plus Clerk's fees
Above 1,000,000.................................. 1,200 plus .00075 in excess of
1,000,000, not to exceed a total fee
of $10,000, plus Clerk's fees
Second and Subsequent Accounts: Apply the fee schedule for a First Account based on the Market value of assets brought forward, plus additions (receipts, capital gains and adjustments).
Statement In Lieu of Final Account or Statement of Intent to File a Statement in Lieu of a Final Account:
Commissioners' Fee.....$75.00 Clerk's fee......$16.00
Clerk of Henrico County Circuit Court Filing Fees:
Up to and including 10 pages............$16.00
11 to and including 30 pages.............$31.00
Over 30 pages.......................................$51.00
NOTE: ALL FEES PAYABLE TO THE COMMISSIONER AND CLERK OF COURT ARE PAYABLE AS FOLLOWS: "COMMISSIONER OF ACCOUNTS", IN ONE CHECK, INCLUDING THE CLERK'S FEES.
Filing Dates for Accounts
An account is due sixteen (16) months from the date of qualification for the first twelve (12) month period, and every sixteen (16) months thereafter from the ending date of the prior account for the succeeding twelve (12) month period until such time as the estate is closed.
****THE EXTENSION OF THE ACCOUNTING PERIOD BEYOND 12 MONTHS IS NOT PERMITTED WITHOUT THE PRIOR WRITTEN CONSENT OF THE COMMISSIONER. SUCH CONSENT IS RARELY GRANTED DUE TO THE WORKLOAD DEMANDS OF THE OFFICE.
Note: An estate is not final and may not be closed if there are still assets on hand. Your final accounting must show zero (0) assets on line 9 of Form CC-1680.
You should calculate the fees due the Commissioner of Accounts or contact the Commissioner of Account’s office with a preliminary draft of your final accounting to obtain the final fees of the Commissioner associated with the review and audit and reporting of your final account. If you omit the Commissioner’s fees in the final account and make final distribution to beneficiaries, you will personally be responsible for the Commissioner’s fees and your account will not be audited and approved without the payment of those fees by you personally. Please do not call the Commissioner’s office for a quote of fees without faxing the draft of the final accounting. Additionally, please note that we do not make preliminary approval of drafts of accountings. The review of an accounting for determination of the Commissioner’s fee is not an approval of that accounting, but is only used by the Commissioner’s office to determine the fees payable prior to final distribution.
Forms to be Used by Fiduciaries for Testate and Intestate Estates:
- Account for Decedent’s Estate (Form CC-1680 | Instructions | Sample)
- Statement Under Oath (Form CC-1681)
- Statement of Intent to File (Form)
- Estate Tax Certificate (Form)
- Sample Beneficiary Receipt (Form)
- Alive and Well Affidavit (Form)
- Special Power of Attorney Beneficiary Receipt (Form)
- Specific Power of Attorney (Form)