Problems of Fiduciary Accountings in Probate Estates – Solved.
Main Subject: Probate
Subject Statute(s): NRS §§150.080 and 150.110
Over the years a common theme repeats itself over and over in probates. Heirs/Devisees complain they do not know until the very end what their share of the probate estate is. They have this complaint despite the existence of Nevada law requiring an inventory and an account (if you can call it that) be published to heir/s devisees. During the probate process many heirs/devisees attempt at an educated guess based upon the an inventory provided to them 60 days after the probate starts. Typical estates have a few twists and turns occur such as sale of a residence, maybe a credit card or doctor’s debt needs to be paid. Also payment of legal fees and personal representative compensation have to also be paid. While most expenses and debt payments are frequent and typical, many expenses from the perspective of the heir/devisee are unexpected and are presented at the end of the probate.
To compound matters, Nevada law has very lax financial reporting requirements to heir/devisees in probates. NRS §§150.080 (First Accounting) and 150.110 (Final Accounting) only require the following:
- The amount of money received and expended by the personal representative.
- The claims filed or presented against the estate, giving the name of each claimant, the nature of his or her claim, when it became due or will become due, whether it was allowed or rejected by the personal representative, or not yet acted upon.
In addition to not specifically classifying income and expenses, nothing in the statute directs the personal representative to break down the share due each heir/devisee. The lax reporting requirement causes a compounding of negative effects upon the ultimate recipients – heirs/devisees. In the end, heir/devisees either benefit from or suffer from personal representative’s actions. Accounting simply is as it states – makes the personal representative accountable for the probate financial transactions. For example many times deductible expenses arise that are not deducted on the estate’s income tax return. If an accounting is not provided, the tax deductions are lost and heirs/devisees pay taxes that ought not have been. Also many times personal representatives distribute property from the estate to an heir/devisee and fail to adjust the heir/devisee share account. Then the personal representative gets down to a bank account, then assuming the Last Will and Testament divide evenly, the personal representative will follow the language. Then each heir/devisee will take evenly. What is lost here is the devisee who received the prior distribution actually got more, and the devisees never knew they received less. Many times heir/devisees keep a loose count on what they think they are going to receive. When what the heir/devisee eventually receive is less than what s/he thought, suspicion sets in. While an heir/devisee may not act upon his/her emotion, the suspicions will sit at the back of his/her mind for years, if not for the rest of his/her life.
We at Crest Key Legal and Accounting have repeatedly seen the negative effects resulting from inadequate accountings upon estates and heirs/devisees. As such we have built an accounting system specifically for Nevada probates that can easily and efficiently be implemented and accepted in all district courts. So not only do we handle the legal work in the courts, we also produce accountings with a weight of authority to withstand challenges and keep heir/devisees informed, and support income tax reporting and elections. We take care to reflect in the legal documents filed with the court to contain elections and notice necessary to effectuate tax deductions. This in turn positively benefits heirs/devisees to receive all due them from the deceased. At the same time we protect the personal representative from baseless accusations of improper conduct.