Stewardship of funds

By Tolley

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

  • Stewardship of funds
  • Personal Representatives' legal duty
  • Open an account to receive funds
  • Deposit accounts
  • Some practical tips on bank accounts
  • Accounting records
  • Managing cash flow

Personal Representatives' legal duty

Under theAdministration of Estates Act 1925, s 25 thepersonal representatives are under a legal obligation to give an account of their stewardship of thefunds for which they are responsible when called upon by thebeneficiaries to do so. The duties of thepersonal representatives are stated as follows:

  • to collect thereal and personal estate of thedeceased and administer it according to law
  • when required to do so by theCourt, exhibit on oath in theCourt a full inventory of theestate and when so required render an account of theadministration of theestate to theCourt
  • when required to do so by theHigh Court, deliver up thegrant of probate or administration to that Court

In collecting theestate, an accurate record must be kept of all themonies received and paid. The preparation of estate accounts is a matter of good practice. A financial record of theadministration will make sure that all assets have been collected in, liabilities duly discharged and that thebeneficiaries have received what they are entitled to either under theterms of thewill or therules of intestacy. In addition, theaccounts will assist thepersonal representatives with thecompletion of tax returns required for theadministration period. See theRequirement for estate accounts and Format for estate accounts guidance notes. In order to prepare accounts and distribute theestate, thefunds must be kept safe in a designated bank account and each transaction must be identifiable.

Open an account to receive funds

As bank accounts are closed and assets sold, theproceeds should preferably be collected in just one designated account. The account can either be a

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