Formal Court Accounting: What is it?

When it comes to court accounting, there are two types: informal and formal. People typically experience informal court accounting, which is an accounting performed by an executor appointed by the deceased. However, there are occasions where formal court accounting is required. 

Formal court accounting is an accounting performed by a court-appointed administrator or trustee.

Related Article: California Court Accounting: What is Included?

When Is It Needed?

Formal accounting must take place if no will exists, the deceased did not appoint an executor, or if the beneficiaries are disputing the distribution of assets. The court-appointed administrator must determine what assets go to each beneficiary. It must also be presented to the court in legal proceedings, during which beneficiaries can argue about the distribution of assets before the judge makes a final decision. 

Formal court accounting can cost the estate quite a bit of money due to attorney costs, court fees, and potential costs incurred by the court-appointed administrator. These individuals can choose to prepare the actual court accounting or hire someone else to complete the court accounting. With formal accounting, the probate process can also take years as beneficiaries argue over the deceased’s assets.

Related Article: A Beginners Guide to A Court Accounting

Informal vs. Formal Court Accounting

A court-appointed administrator or an executor reviews and interprets the will to determine the deceased’s wishes for asset distribution. This includes assets such as cars, jewelry, stocks and bonds, primary residence, and other real estate. Informal accounting is less expensive than formal accounting because it has fewer costs. In regard to estates, informal court accounting is applicable if the assets are less than $150,000 in the state of California. 

Overall, formal court accounting is much more comprehensive and reports what happened with the assets in an estate. It occurs more often than informal accounting because most estates go through probate which requires review in court. A trust does not typically go through probate. If it does go through probate, you will likely need a formal court accounting.

Can I Hire a Professional for Court Accounting?

Yes, you can hire a professional that specializes in court accounting to file an accounting. If you are the court-appointed administrator or if you hold fiduciary responsibilities, you can hire someone to complete the accounting. It’s important to take care as this requirement can get complicated. Reach out to Marcia L. Campbell, CPA and team if you have a question.

Do you need help with court accounting? Schedule time with Marcia Campbell, CPA.

If you need help, please contact us by filling out our Contact Form or by giving our office a call at +1(951)686-3608.

As the most experienced CPA in the Inland Empire who specializes in working with seniors, Marcia L. Campbell is committed to helping each client thrive by caring for their personal and financial wellbeing with genuine interest, well-established expertise, and a focus on respectful partnerships. Marcia’s team specializes in a number of services, including elder & financial care, court & trust accountings, as well as private fiduciary and tax services. At Marcia L. Campbell, CPA, we understand the importance of our clients’ individual needs and are committed to helping them make the best personal and financial decisions for their future.

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