Preparing and Filing a Proper 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 Settlement of 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 Settlement of 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 after the date of qualification and must be filed within sixteen (16) months of the date of qualification; or if administration is not complete, a Statement of Intent is filed.
The estate must be fully distributed to execute the Statement in Lieu. If the estate has not been settled by the payment of all creditors claims and full distribution of the residue to all beneficiaries/heirs (with a zero balance in the estate bank account), a Statement of Intent to file a Statement in Lieu of Settlement of Account (SOI) is filed as an interim account within sixteen months, and annually thereafter until the Statement In Lieu of Settlement of Account can be filed.
NOTE: If the residuary beneficiary of the estate is a trust, a Statement In Lieu of Settlement of 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 Settlement of Account, but the estate is insolvent (unable to pay all creditors in full, or satisfy in full all specific bequests made in the will), a full account must be filed and the Statement In Lieu of Settlement of 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 an estate attorney !
Where is the Statement in Lieu of Settlement of 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 $168.00 (this includes the clerk’s filing fee). This fee has been set by the Henrico Circuit Court on the recommendation of the Judicial Council of the Supreme Court of Virginia. A tax certificate must accompany the Statement in Lieu of Settlement of 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 subsequent accounts, THE PERIOD OF EACH ACCOUNT SHALL NOT EXCEED TWELVE (12) MONTHS. You have four (4) months to prepare and submit the account, hence the sixteen month period between accounts.
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 period places an increased burden on the auditor of the account that is not contemplated by the statutes and the workload demands of the Commissioner’s office.
IF YOU FILE AN ACCOUNT WHICH EXCEEDS THE TWELVE MONTH ACCOUNTING PERIOD, 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
FONT SIZE and LEGIBILITY
To be accepted for audit your account must be legible and be stated in a font size not less than 10 point, preferably 12 point. The account will be recorded at the Henrico Circuit Court and therefore all entries on the account must be of sufficient size and legibility to be readable and comprehendable.
In order to accept any filing the margins MUST be one inch (1″) on all four sides of each paper
making up the actual account. These are Library of Virginia digital recording standards.
Spead sheets cannot be submitted.
Accounts which do not meet these standards will be returned to be restated in acceptable format.
ACCOUNT FORM CC-1680
BE AWARE ON THE FIRST ACCOUNT:
ON A FIRST ACCOUNT THE ACCOUNTING PERIOD BEGINS WITH THE DATE OF YOUR QUALIFICATION–HOWEVER, TO BALANCE THE ACCOUNT YOU MUST REPORT ALL ACTIVITY (INCOME AND DISBURSEMENTS) ON THE DECEDENT’S ASSETS REPORTED IN PART 1 OF THE INVENTORY, WHICH HAVE TRANSPIRED BETWEEN DATE OF DEATH AND DATE OF QUALIFICATION. This generally includes any post death activity on all bank, credit union and stock brokerage accounts.
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.
“Carrying Value” of Assets
When preparing your account do not report changes in the market value of assets from account to account. The inventory value reported is the “carrying value“ of the asset, and changes in market value are not reported unless the asset is sold, at which time a “gain” or “loss” is reported on the account on line 3 or line 7 for the period in which the asset was sold.
If the decedent had a dividend reinvestment stock or mutual fund account which had automatic purchases of additional shares with money from dividends paid, dividends used to purchase additional shares will change the carrying value by the amount of each dividend. For example:
Carrying value (inventory value) of ABC Corp. 1000 shares@ $10/share $10,000.00
Dividend receipt reported on line 2 (from monthly portfolio statement) $21.00
Add’l shares acquired by reinvestment of dividend of $21.00 2.1 shares
New carrying value of ABC in “assets on hand” line 9 1002.1 shares $10,021.00
This process repeats for each reinvested dividend until the asset is sold, at which time a gain or loss is reported based on the new carrying value of all the shares (or the carrying value of less than all shares) and the net sale proceeds received.
Remember, however, that “in kind” distributions of the actual asset to beneficiaries/heirs are to be distributed at market value on the date of distribution, even though the accounting is balanced based on carrying value of the asset.
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.
**EVEN THOUGH YOUR FIRST ACCOUNT BEGINS WITH THE DATE OF YOUR QUALIFICATION, BE SURE TO ACCOUNT FOR RECEIPTS ON THE DECEDENT’S ASSETS FROM DATE OF DEATH TO YOUR QUALIFICATION DATE, OR THE ACCOUNT WILL NOT BALANCE.
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’ (Line 2) 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. SEE the example given under “carrying value” above.
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 and a first account has not been filed, 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 the assets of the estate at the time of the disposition (sale) of an asset. For example, if an automobile was listed for $5,000.00 on the inventory and it was sold for net proceeds of $6,000.00, you would show a gain of $1,000.00 on line 3. Likewise, on line 7 “Losses”, if that automobile sold for net proceeds of $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 of the accounting where the market value of assets on hand is reported. However, the carrying value is the value used to balance the account. You do not need to adjust for changes in market value. You report a gain or loss if the asset is sold.
If you have 100 shares of Exxon stock at $10.00 per share at decedent’s death, 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. Remember however that market value must be used to make proper distributions as it is market value that determines what the beneficiary actually received. 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 per share.
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) since each is receiving the same asset in distribution. 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. NOTE: The distribution of different stocks to equal beneficiaries is not proper. The proper procedure is to split each stock into equal shares for distribution, unless the beneficiaries have agreed otherwise, by written, notarized consent.
Line 4: Adjustments
Line 4 is to add or delete assets owned by the decedent at death which were omitted or improperly included on the Inventory. For example, if after filing the inventory a certificate of deposit was discovered to be owned by the decedent with no beneficiary designation, it would be listed as an adjustment (addition) under the accounting on line 4.
It may be that you have to report a negative adjustment. If a certificate of deposit was initially listed under Part 1 of 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 since it was not a probate asset.
If you find additional estate assets valued at more than $25,000.00 to the probate estate before filing your first account, you are required to file an amended inventory reporting “after discovered assets”. If however, you have already filed the first account and discover additional assets, or the additional assets are valued at less than $25,001, the addition of the assets to the estate can be reported as an “adjustment” on the accounting on line 4. Additional probate tax will be reported to the Clerk of Court if the additional assets exceed $25,000.
REMEMBER: Do not enter changes in the market value of assets under adjustments. No changes are made for the increase or decrease in value as long as the asset is retained in the estate. Stock value increases are not used to balance the account-the carrying value is used. Changes in real estate assessments are not reported and the value of real estate reported on the inventory does not change as long as the real estate is retained as an estate asset.
ALSO, you cannot enter a “miscellaneous adjustment” to balance your account. If your account does not balance on lines 5 and 10, it is because you have not properly prepared the account. Miscellaneous adjustments are not acceptable and if entered your account will be returned to be properly stated.
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.
Disbursements on line 6 are for debts paid to creditors and costs of administration–not distributions to beneficiaries, which are reported on Line 8 of the account summary.
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 and 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.
Reimbursements to personal representative or familly member: Lawful debts of the estate (e.g. funeral costs, qualification costs, bond premium, etc.) advanced by a family member or the personal representative may also be repaid, so long as the person being reimbursed provides an invoice for the amount(s) being reimbursed and evidence that they paid the invoice (cancelled personal check, bank statement, credit card statement, etc.).
EVEN THOUGH YOUR ACCOUNT BEGINS WITH THE DATE OF QUALIFICATION, BE SURE TO ACCOUNT FOR ANY WITHDRAWALS FROM THE DECEDENT’S ASSETS FROM DATE OF DEATH TO DATE OF QUALIFICATION, OR THE ACCOUNT WILL NOT BALANCE.
NOTE AS TO SURETY ON BONDS
If you were required to post a surety bond at qualification, there is an annual premium due on the bond as long as the estate remains open. When we approve a final account, we write the surety advising that an approved final account has been filed. The premium then terminates.
If you were required to post bond, with surety, be sure to see that the premiums on the bond are paid or otherwise provided for by arrangement with the bonding company before you calculate the final amount available for distribution.
If the surety is owed a premium before your final account will be approved by this office, you should pay it, unless the surety agrees to delay the rebilling long enough for you to have your final account approved. Remember to allow at least two months from filing for our approval on accounts which have surety bonds.
If you do not pay the bond premium or reach an agreement with the surety not to rebill the estate, you will be personally liable for the unpaid surety bond and you will be without assets to pay it if you have fully distributed the estate.
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/Heirs
Distributions are the payments made to beneficiaries/heirs of the estate. Distributions 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. For intestate estate the Code of Virginia specifies which heirs at law inherit. See Section 64.2-200, Code of Virginia. (link above to right of page “COURSE OF DESCENTS”).
Any distribution which is at variance with what is stated in the will, or Virginia law in the absence of controlling language 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 the 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 from the trustee to the executor
to make direct distribution to specific beneficiaries in the specific amounts.
If the distributions are contrary to the trust under agreement
provisions, they will not be approved.
An additional fee of $150.00 to review the trust under agreement is payable to
the Commissioner’s office to consider approval of the bypass distribution.
c. The law of non-exoneration. If an asset is specifically bequeathed or devised, and has a unpaid lien on it at death, generally the specific beneficiary is obligated to pay that lien–not the estate. For example, if a Corvette is specifically bequeathed to Johnny in the will, and $10,000.00 is still owed on a lien on the title at the decedent’s death, Johnny gets the car, but is obligated to pay the debt if he wishes to take the car. This raises a number of potential problems for the estate. See the discussion of non-exoneration under “Fiduciary Duties.
d. Distribution to heirs/beneficiaries dying after the decedent. If a beneficiary or heir survived the decedent and was entitled to a distribution but died before it was made, it generally MUST be paid to the personal representative of the estate of the deceased beneficiary or heir (not to his/her spouse or children). Someone must qualify on the estate and you will distribute to that qualified personal representative and receive a notarized receipt for the distribution and a qualification certificate indicating the proper qualification.
If (i) the deceased heir/beneficiary died without someone qualifying on his/her estate; and (ii) his/her probate estate was valued at $50,000 or less (excluding real estate), the distribution may be able to be paid under the Virginia Small Estate Act, Section 64.2-600, Code of Virginia, and following sections, if the formalities of the statute are met, specifically the proper execution of the affidavit described in Section 64.2-601, Code of Virginia.
NOTE: Virginia has a requirement of survivorship by 120 hours unless the will directs otherwise (Sections 64.2-2201 and 2202, Code of Virginia); or the provisions of the Virginia anti-lapse statute are applicable (Section 64.2-418, Code of Virginia).
If in doubt regarding how to make a distribution intended for an heir/beneficiary who has died before or after the decedent, it is adviseable to consult with an estate administration attorney.
DISTRIBUTION CONTRARY TO THE WILL OR INTESTATE LAWS
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.
“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 costs and 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 with the beneficiary agreeing to assume the risk of transport.
Unless the will provides otherwise, the estate is not obligated to pay the costs of shipping or to insure the items as an expense of administration, so it is vital that all parties affected understand that the costs and risks of shipping is on the beneficiary.
It is strongly suggested that if a beneficiary cannot pick up the items bequeathed, that the beneficiary be the one who makes all arrangements for shipping and insurance, 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 Distributions to Beneficiaries/Heirs
Receipts must be presented to the Commissioner of Accounts for all distributions to beneficiaries/heirs (personal property and/or cash). By statute, a proper receipt for monetary disbursements includes a copy of the front of the cancelled check which was returned with the monthly bank statement but proof of “receipt” by a beneficiary is required by the Commissioner.
In almost all cases the Commissioner will require copies of both sides of the cancelled checks to beneficiaries/heirs which show an endorsement by the beneficiary, or in the alternative a notarized receipt for the distribution. Ask the beneficiary/heir to endorse the distribution check with a live endorsement, not simply “for deposit only”. It can be endorsed “for deposit only, followed by the beneficiary’s signature”.
The notarized receipt requirement applies to distributions of tangible or intangible personal property as well as monetary distributions (if a proper copy of both sides of the endorsed cancelled check to a beneficiary is not presented for a monetary distribution).
Note that the carbon copy of a cashier’s or bank check, or copy of an uncashed check are not evidence of “receipt of payment” but only issuance of payment and will not be accepted by the Commissioner’s office. You must ask the bank for a copy of both sides of the beneficiary’s endorsed cashiers or bank check.
A sample receipt for tangible personal property or monetary distributions is included with the estate forms. (Sample Beneficiary Receipt)
Distribution in Intestate Estates
Intestate estate distributions can be especially problematic. Unless you are certain as to the proper heirs 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 Minor Beneficiaries/Heirs
Distributions generally cannot be made directly to beneficiaries under the age of eighteen (18). If the will allows for distribution to a minor under the Uniform Transfers to Minors Act, it may specify the age for which the distribution must be held in the UTMA account. The Code of Virginia allows for the holding of the assets until age 18, 21, or 25 (with limitations). Check the will to see which way the minor’s distribution is designated to be held. If not stated, or the distribution to a minor is by intestacy (no will), age 18 applies and you may not delay it further.
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 and no trust mandated for the minor beneficiary, 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 $25,000.00);(see the two part receipt in the form section under form number 19).
Note: It is the personal representative’s duty to:
(1) determine this form of distribution to be in the best interest of the minor before making the UTMA transfer; and,
(2) determine that the will does not prohibit this form of distribution (i.e. the will does not require a trust).
b. Unless the will allows otherwise (see subparagraph d. following), payment of bequests in excess of $25,000.00 for minors are made to a Court qualified Guardian of the Property of a Minor, with a receipt from that Guardian; or held in trust if so directed by the will;
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. The receipt for the distribution will be given the personal representative of the estate by 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 unless the will “expressly authorizes you to do so“;
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 possibly can 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, or consult with an estate attorney). Obviously, if the will calls for a trust for the benefit of a minor beneficiary, the trust must be funded, the terms of the trust thereafter followed as the decedent intended, and the payment under the Uniform Transfers to Minors Act will not be approved;
e. Caution: If in doubt about the method of distribution to a minor, seek legal advice.
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 is the preferrable method of making the distribution, 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. A Power of Attorney Still in Force 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 (this method is rarely approved for substantial distributions); 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.
DISTRIBUTION TO HEIRS AND BENEFICIARIES DYING AFTER THE DECEDENT
BUT PRIOR TO DISTRIBUTION
Often a beneficiary or heir will die after the decedent, but before final distribution is made to beneficiaries. If this occurs there usually must be a qualification on the estate of the deceased beneficiary/heir. The personal representative then legally receives the inheritance intended for the deceased beneficiary and administers it according to the deceased beneficary’s will or intestacy. In this manner a proper receipt for the distribution is given for the payment intended for the deceased beneficiary.
A possible alternative is the use of the Small Estate Act (Section 64.2-600, Code of Virginia) and presentation of a proper affidavit pursuant to the statute (Section 64.2-601, Code of Virginia). Be aware that a Small Estate Affidavit cannot be used if the deceased beneficiary’s entire personal probate estate (including what is to be received in the proposed distribution) exceeds $50,000 at the time of death. Distributions improperly made under the Small Estate Act will not be approved by the Commissioner. Consult with an estate administration attorney if you plan to distribute a deceased beneficiary’s/heir’s share.
Certain statutory rules apply which often present difficulties for personal representatives in making proper distributions to beneficiaries of testate and intestate estates, such as distributions to minors and to deceased beneficiaries (either dying before or after the decedent). 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 signed notarized receipts, or both sides of cancelled checks, 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.
There is no specific date on which you must file a final account. Each estate is different. The key to making final distribution is to be sure all creditors of the decedent have been paid; otherwise, if an estate bill comes in after you have fully distributed, you are potentially responsible for it. It is best “to let the dust settle” and allow time for all assets and liabilities to be identified. Medical bills are notoriously late in receipt. So, possibly you can settle the estate in 12 months and file a first and final account; but more commonly estates are settled on the second or third account.
If you are ready to file a final account the estate must have been fully disbursed and distributed. Do not file a final account reporting final distribution when you still have the assets in the estate bank account to be distributed. Do not “hold back for contingencies” any sum when you report a final account. This will require an additional account to close out the amount held back. You must have nothing left in order to file a final account.
You do not need our approval to distribute. You are charged with making proper distribution, either according to the will or the Virginia laws of intestacy if there was no will. If you are unsure if you are distributiong correctly, consult with an estate administration attorney, before distributing.
The assets and all cash must be fully paid out to the proper parties and your estate bank account balance must be zero in order for the account to be a final. Otherwise, your account will be treated as an interim account, and you will have to file another account reporting what you did with the retained assets.
ASSETS DISCOVERED AFTER A FINAL ACCOUNT
If you discover assets after closing the estate and approval of your final account by the Commissioner, it will be necessary to do the following:
a. Obtain a new qualification certificate from the probate section of the Henrico Circuit Court Clerk’s Office to present to the person/company holding the asset, as they will normally not rely on an old certificate of qualification. (no new qualification of the original fiduciary is required);
b. In most cases you will file within 4 months of obtaining the new certificate a Supplemental Inventory reporting the after discovered assets, using form CC-1670, and checking the second box at the top stated “an inventory showing after discovered assets”. The filing fee to the Commissioner is $110.00 plus clerk’s fee of $18.00 for a total of $128.00;
If the amount is less than $ 500.00, write the Commissioner to see if an alternate procedure will be allowed.
c. After allowing for additional filing fees and costs, you will then distribute to the correct beneficiaries/heirs at law; thereafter filing within 16 months of receiving the new qualification certificate, with the Commissioner, a Supplemental Final Account on Form CC-1680, reporting on line 4 “Adjustments” the nature and amount of the additional asset; on line 6 “Disbursements” including the filing fees for the supplemental inventory and supplemental final account and any additional compensation allowed on the additional asset; and finally on line 8 listing each “distribution” made to a beneficiary/heir. You must also include copies of the front and back of the cancelled disbursement and distribution checks. The filing fee for the supplemental account is determined based on the amount of the after discovered asset from the Henrico Order for the Commissioner’s Fees stated on page 1 of this website, plus Clerk’s fees of $18.00.
HANDLING OF EXEMPT PROPERTY AND
FAMILY ALLOWANCE CLAIMS
Under the Code of Virginia, Sections 64.2-309 through 314, certain allowances are provided which have priority in the administration of an estate if claimed. These include the family allowance, exempt property claim and homestead allowance. It is not the responsibility of the personal representative to file these claims, but if filed you should be aware that the claims must be properly filed to be valid and that they take priority over all debts of the estate except administrative costs and expenses.
It is not proper to charge to the estate any of the expenses of preparing or filing these claims as they are made by individual claimants and are claims against the estate and not on behalf of the estate.
When you submit an account on which you show such claims they should be reported as “disbursements” not “distributions” and a copy of each claim filed must be presented with the accounting.
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.
If you pay attorney’s or CPA fees which you do not believe should be deducted from the commission allowable to you under the ” Guidelines For Fiduciary Compensation” you must also provide itemized invoices from those providers for the Commissioner to analyze in determining proper fiduciary compensation.
Data stored on electronic media cannot be submitted as proper documentation.
Commissioner of Accounts Fees and Clerk of Court Fees
Fees from the 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……………$ 220 plus Clerk’s fees
50,001- 100,000…………… 440 plus Clerk’s fees
100,001- 200,000…………… 550 plus Clerk’s fees
200,001- 300,000…………… 660 plus Clerk’s fees
300,001- 500,000…………… 825 plus Clerk’s fees
500,001- 700,000…………… 990 plus Clerk’s fees
700,001- 1,000,000…………… 1,320 plus Clerk’s fees
Above 1,000,000…………… 1,320 plus .00075 in excess of
1,000,000, not to exceed a total fee
of $11,000, 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:
Statement in Lieu: Commissioner’s fee…..$150.00 (eff. July 1, 2017) Clerk’s fee……$18.00
Statement of Intent: Commissioner’s fee..$ 75.00
Commissioners Fee Schedule (Link)
Clerk of Henrico County Circuit Court Filing Fees:
Up to and including 10 pages…………$18.00
11 to and including 30 pages………….$32.00
Over 30 pages……………………………….$52.00
NOTE: We often record relevant documents with the approved accounting, such as receipts from a Custodian Under the Uniform Transfers to Minors Act or a Non-Judicial Settlement Agreement, so allow for those pages in determining the correct Clerk’s filing fee.
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 STATUTORY REQUIREMENTS AND 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 in Force Affidavit (Form)
- Special Power of Attorney Beneficiary Receipt (Form)
- Specific Power of Attorney (Form)