Trusts and Inheritance Tax

Requirement for estate accounts

Produced by Tolley
  • 21 Dec 2021 16:31

The following Trusts and Inheritance Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • Requirement for estate accounts
  • Duty to prepare estate accounts
  • Who are the accounts for?
  • The purpose of estate accounts
  • Reconciliation to reconciliation
  • Estate to estate
  • Approval of accounts

Requirement for estate accounts

Duty to prepare estate accounts

The personal representatives’ (PRs) legal obligation to prepare accounts is set out in Administration of Estates Act 1925, s 25. Their prescribed duties include:

“When required to do so by the Court, exhibit on oath in the Court a full inventory of the estate and when so required render an account of the administration of the estate to the Court.”

And indeed that obligation (‘to keep a full account of how the estate has been distributed’) is repeated in every statement of truth leading to a grant of representation.

However, the law does not provide any further guidance as to how the duty is to be fulfilled. There are no statutory requirements as to the format of the estate accounts or the degree of detail. Consequently, PRs or their advisers may choose a presentation which best suits the circumstances.

A recommended format for estate accounts is described in the Format for estate accounts guidance note.

Who are the accounts for?

Primarily, the estate accounts are intended to be the PRs’ account to the beneficiaries of the estate. All residuary beneficiaries are entitled to see the accounts. Legatees are not, (unless their legacies cannot be paid in full.) Where professional advisers are acting, they will prepare accounts for the PRs' approval, and they will be subsequently distributed to the residuary beneficiaries

There is no requirement to file estate accounts with a government agency. The initial valuation of the estate at death is provided to HMRC, where inheritance tax is payable,

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