Accountant FAQs

A probate accountant sets up the estate’s books, secures an EIN, tracks assets and debts, prepares court-ready fiduciary accountings, and files required tax returns (1040 final, 1041 estate/trust, 706/709 if applicable). They also advise executors on cash flow, reserves, and tax-efficient distributions.

The attorney handles legal filings, court procedures, and legal risk; the accountant handles financial recordkeeping, valuations tie-outs, and tax filings. Both work together so the executor can meet fiduciary duties.

Ideally within 2–4 weeks of appointment (or sooner for complex estates). Early setup avoids commingling, missed deadlines, and painful cleanups.

The fiduciary (executor/administrator or trustee). The accountant’s work product supports court requirements and beneficiary reporting.

Sometimes, but even “simple” estates need an EIN, basic ledger, and at least one tax return. A short consult can confirm whether DIY is safe.

Hourly, fixed-fee phases, or hybrid. Scope usually includes onboarding (EIN, books), monthly bookkeeping, and tax filings. Court approval may be required in supervised estates.

The estate, as an administrative expense (subject to reasonableness and, in some jurisdictions, court approval).

Scope (books/taxes/accountings), deliverables, timeline, fee model, document-sharing method, and what’s not included (e.g., investment management, appraisals).

Death certificate, Letters of Appointment, will/trust, asset list with date-of-death (DOD) values, liabilities, last filed tax returns, bank/investment statements, property tax bills, insurance, business/LLC docs, and prior accountant contact.

Estates and most post-death trusts need their own EIN for banking and tax filings.

Open an estate checking account; never use the decedent’s personal accounts post-death. Deposit all estate income and pay all estate expenses from the estate account.

Any double-entry system is fine (e.g., QuickBooks). Use a fiduciary chart of accounts that separates principal vs income .

Principal is the corpus (assets on hand at DOD and capital transactions); income is earnings (interest, dividends, rents). This split drives beneficiary reporting and court accountings.

The executor obtains qualified appraisals for real property, valuables, and closely-held business interests. The accountant ties appraisals to DOD values used for basis and accountings.

A standardized report showing opening principal (DOD values), receipts, disbursements, gains/losses, income vs principal, and ending balances—reconciling to bank/broker statements.

Varies by jurisdiction and whether the estate is supervised. Many courts require an initial inventory and periodic or final accountings.

Inventory with DOD values; principal receipts/disbursements; income receipts/distributions; realized gains/losses; administrative expenses; taxes; and a reconciliation to statements.

Monthly statements, canceled checks, invoices/receipts, appraisals, sale closing disclosures, 1099s, K-1s, and a transaction ledger.

• Final Form 1040 for the decedent
• Form 1041 for the estate/trust (with K-1s to beneficiaries if income is distributed)
• Form 706 (estate tax) if required or to elect portability
• Form 709 for large lifetime gifts (as needed)

Yes. An estate can elect a fiscal year ending the last day of a month up to 12 months after DOD. Trusts are generally calendar-year.

Estate income distributed carries out to beneficiaries via Schedule K-1, potentially reducing estate-level tax through the distribution deduction.

Distributable Net Income caps the amount of income that can be passed to beneficiaries for tax purposes. The accountant calculates DNI to optimize distributions.

Not required for tax, but often filed to elect portability so a surviving spouse can use the deceased spouse’s unused exemption (DSUE). This can be valuable for future tax planning.

Generally yes, to fair market value at DOD. In community property states (like Texas), both halves of community property typically receive a full step-up.

Generally no. Estates usually can’t claim the homeowner exclusion; beneficiaries might if they own/occupy post-distribution, and certain trusts may qualify. Plan timing with the accountant and attorney.

Rules depend on beneficiary type and decedent’s age at death (e.g., 10-year rule for many non-spouse beneficiaries). Incorrect withdrawals can trigger penalties—coordinate early.

Executors may elect to claim certain last-illness medical expenses either on the decedent’s final 1040 or on the estate tax return (not both). The accountant will model the better outcome.

Yes, typically to independent contractors (e.g., cleaners, caregivers, realtors paid directly by the estate) paid ≥$600. Track vendor W-9s from day one.

Enough to cover taxes, final bills, professional fees, and contingencies—often several months of expected outflows. The accountant helps size the reserve before making interim/final distributions.

A package showing the full lifecycle of assets and liabilities; beneficiaries sign to acknowledge receipt and approve the fiduciary’s accounting, paving the way to close.

Often yes, once debts, taxes, and a prudent reserve are set aside. Document each distribution and update the tax plan (DNI/K-1s).

Commingling funds, missing receipts, undocumented reimbursements, unreported 1099 payments, and valuations that don’t tie to appraisals or statements.

By maintaining reconciled ledgers, monthly binders of statements and invoices, tie-out workpapers for DOD values and sales, and clear principal/income classifications.

Collect rent via the estate account, book operating expenses, decide on hold/sell, and report net income on 1041 (and K-1s if distributed). Depreciation and recapture must be tracked.

Expect a formal valuation, payroll/benefit wind-down or continuation, potential §6166 (estate tax deferral) analysis, and careful basis/stock tracking.

Often yes (state income or transfer taxes, filing obligations). The accountant will flag separate state returns or allocations.

They’re estate assets. Document wallet locations/keys, obtain DOD values, and report sales/dispositions like other property.

No. Texans generally face only federal estate/gift tax rules.

Executors often have reduced court supervision, but sound books, inventories, and tax compliance are still required—your accountant is central to that.

Sometimes. Even without full administration, you may need DOD valuations, basis adjustments, and final tax filings.

Both can be excellent. Prioritize deep fiduciary accounting and 1041/706 experience, responsiveness, secure document handling, and references.

Use the accountant’s secure portal. Avoid email for sensitive IDs, statements, or health info.

Depends on creditor periods, asset sales, tax timelines, and beneficiary coordination. Good books and early tax planning usually shorten the process.