GROUP 3 (ASSIGNMENT)

CAT 2
LAW OF SUCCESSION
LECTURER/COURSE FACILITATOR: MS. LILIAN VUNGO

QUESTION : ESTATE ACCOUNTS IN RELATION TO SUCCESSION PROCEEDINGS

MARCH, 2021
 STUDENT NAME ADMN.NO.
1 Kamau Edwin Kang’ethe Blaw/54989/2016

2 Peter Kariuki Blaw/2017/67674

3 Collins Macharia Blaw /2017/73354

4 Muhuhu Scholar Blaw/2018/39516

5 Faith Kamiri Blaw/2018/35638

6 Elizabeth Ndungu Blaw/2018/37642

7 Kamoko Ebenezer Blaw/2018/36910

8 Sharon Kinya Blaw/2018/39573
9 Rachael Naserian Blaw/2018/39574
10 Zipporah Wangui Blaw/2017/63137
11 Duncan kibet Blaw/2018/36643
12 Prudence N Wafula Blaw/2018/39231
INTRODUCTION
The keeping of estate accounts is an important aspect of administration of estates. Personal
representatives are therefore in “a fiduciary position with relation to the estate and the
beneficiaries.” This naturally casts a duty on them to account for their administration of the
estate to both the court and to the beneficiaries. It is also a statutory requirement under the
Law of Succession Act and the Public Trustee Act. There is an obligation placed on personal
representatives and trustees to account to the beneficiaries for their trusteeship of
administration1.

DUTIES OF PERSONAL REPRESENTATIVES REGARDING ACCOUNTS

A personal Representative is the person charged with dealing with the property of a deceased
person. He can be appointed either by the deceased in his will or by the court upon application
for a grant of administration where the deceased died without a will. Important to note is that
an executor appointed by a will can begin undertaking any valid action with the deceased’s
estate before confirmation of grant. However, where the will does not appoint an executor or
the deceased dies intestate, the personal representative is prohibited by law from dealing with
the deceased’s property before confirmation of a grant as this would amounts to intermeddling
which is an offence under the Law of Succession Act. The following are the duties of a Personal
Representative:-

1.To pay out of the deceased’s estate the expenses of a reasonable funeral for the
deceased and collect all property belonging to the deceased. This includes taking
account of debts owed to the deceased and moneys payable to his personal
representatives due to his death.

2. To pay out of the estate of the deceased, all expenses of obtaining the grant and all
other reasonable expenses of administration.

3. To ascertain and pay, out of the estate all his debts and to produce to the court a full
and accurate inventory of the assets, liabilities and all dealings of the deceased up to the
date of the account within six months from the date of the grant. 2

4. To distribute or to retain on trust all assets remaining after payment of expenses and
debts and the income, according to the respective beneficial interests in the estate.

5. To complete the administration of the estate within six months from the date of
confirmation of the grant. This applies to all matters concerning the estate except
continuing trusts. The personal representative is also required to produce to the court a
full and accurate account of the completed administration. Where the personal
1
W. Musyoka, Law of Succession Page 283
2
Section 83(g). Law of Succession Act cap 160.
 representative is unable to complete the administration within six months, they can
approach the court for extension of time.

6. To complete the administration of the estate in respect of all matters other than
continuing trusts and if required by the court and to produce to the court a full and
accurate account of the completed administration. 3

In the matter of the Estate of Anthony Gichigi Wairire (Deceased) Eldoret High Court probate
and administration cause no 32 of 1983.

Nambuye J Stated, “An administrator is a trustee, and he remains accountable to the

beneficiaries for his handling of the administration of the estate”

In this case a purchaser of property belonging to the estate, sold to him by the personal
representative of the deceased, moved to court for a declaration that the transfer of the
property to him by the administrator was valid and absolute. The court remarked that although
there is a general power of sale given to administrator, the administrator remains accountable
to the beneficiaries for the manner he handled the property which makes up the estate.

RIGHTS OF BENEFICIARIES TO AN ESTATE ACCOUNT

Introduction

After someone passes away, their assets and debts will need to be accounted for and managed.
One way to handle this is to have a separate bank account opened after the person’s death,
which is referred to as an estate account. It will be the job of the estate’s executor to set up and
monitor the account.4 An Estate Account illustrates what money has come in and out of the
Estate. This includes assets, liabilities (debts), administration expenses and the final amount to
be distributed to the Beneficiaries.

A beneficiary is defined as a person receiving or designated to receive, benefit or advantage, or

one who is in receipt of benefits, profits or advantage. This is basically a person whose benefit
property is held in trust.

The rights of the beneficiary

The beneficiary, right to information corresponds to the personal representative’s statutory

duty to account and give information. The beneficiary is entitled to full and accurate
information on the amount and state of the estate, how the estate has been dealt with, and
3
Ibid. Section 83(h).
4
https://www.legalmatch.com/law-library/article/what-is-an-estate-account.html
how and how and where the estate funds are invested. The information should be one the
matters relating to the estate which ought to be in trustee’s knowledge.

The beneficiary is also entitled to the information on shares in a limited company where the
same form part of the articles of association. Where the information sought can only be
supplied at a considerable expense, then the beneficiaries must bear the burden, unless the
same can be properly be paid out of the estate. The personal representatives should not take
any indemnity before taking any step to supply the information as this would be considered as
being prudent in the circumstances.

In the Matter of the Estate of John Ngugi Kimani(deceased) of 1999, a beneficiary brought an
action for an account and for the appointment of an auditor to audit the estate account where
the administrators were not in agreement on a common approach on payment of allowances to
beneficiaries and other matters. Koome J directed the administrators to compile the accounts
of the estate as well as a list of the assets and liabilities within a specified period of time, failure
to which the applicant beneficiary was at liberty to engage some independent reputable firm
auditors to audit and compile the list and value of the assets of the deceased. 5

Beneficiaries are entitled to review and approve any compensation requested by the executor.
They are usually asked to agree to the executor’s accounting before receiving their final share
of the estate. If they do not agree with the accounting, they can force the executor to pass the
accounts to the court. This means that the executor will have to show the court everything that
has gone in and out of the estate while he or she was an executor at that point, the court can
also be asked to confirm the executor’s compensation.

ACCOUNTS UNDER THE LAW OF SUCCESSION ACT

Under section 83(e),(g),(h) & (i) of the Law of Succession Act, the personal representatives are
under a duty to produce to court a full and accurate inventory of the assets and liabilities of the
deceased and a full and accurate account of the completed administration of the estate up to
the date of the account, if required to do so by the court on its own motion or on the
application of any person interested in the estate.

In the Matter of the Estate of David Murage Muchina (deceased) 6, Where Kamau A.J :stated
that personal representatives are under a statutory duty to account to all the beneficiaries and
other interested parties.

ACCOUNTS UNDER THE PUBLIC TRUSTEE ACT

5
Law of Succession Book by William Musyoka pp 284
6
Nairobi HC Succ. 2077 of 2002 (eKLR)
Under section 17 (a) & (f) on the duties of a trustee, a trustee can act as a personal
representative or as an administrator of the deceased estate. Under rule 3 of the public
trustees rules, , the Public Trustee is required to make a complete inventory of every estate of
which he is the personal representative, keep an estates’ cash book and a ledger account for
each estate detailing all the monetary transactions, keep a file of all correspondence relating to
the estate and keep in safe custody all the deeds and documents for any person or beneficially
interested in the estate (such as a creditor, heir or beneficiary).

FORM OF ACCOUNTS7

The accounts should carry information and entries detailing all the transactions relating to the
estate. They should not be in technical language since they are mainly intended for the
consumption of beneficiaries and other interested persons who may not understand complex
accounts. They also serve the purpose of informing the personal representatives themselves of
the position of the estate at the material time. The first step in setting up a proper accounting
system is to ascertain the terms of the will of the deceased or, in intestacy, the relevant
provisions of the Law of Succession Act. The will is usually the first document at the beginning
of the estate book. The estate book is a collection of various documents and accounts, which
are required for proper recording of the estate and the dealings in respect of it. It should
contain an index, a copy of the will and or any observations, a memorandum, a schedule, a cash
account, an income account, special income accounts, apportionment accounts and a
distribution account. Only the last five items are necessary in cases where there is no life
interest or minority.

1) The memorandum

The information contained here is of a background nature. It should cover such matters
as particulars of the deceased, his family, their respective domiciles, debtors and
creditors, bankruptcy of companies in which the deceased held shares, deaths of
beneficiaries, estate funds investment decisions, among others. The memorandum is an
essential part of the accounting system, but it is itself not an account.

2) The schedule

This is a record of the assets and liabilities as at the death of the deceased. It consists of
two parts, one listing the assets while the other records the liabilities. It also has a
remarks column in both parts where the events touching on any assets or liabilities are

7
W. Musyoka, Law of Succession, Page 288
 noted. It is a log of all the stages of the estate’s existence. The recording of an asset in
the assets column indicates the personal representative’s acknowledgement of his
awareness of its existence, not control over it. An entry of it in the liability column
indicates the personal representative’s awareness of a claim; it is not an admission of
the claim’s validity.

3) The cash account

All the cash transactions of the estate are recorded here. Cash balances received by the
personal representatives at the date of death or taking appointment are debited in the
cash account, followed by cash receipts, whether from sale of assets or accrued income.
Payments or expenses are recorded similarly on the credit side. The balances in the
hands of the personal representatives at any particular time are ascertained by totaling
the debits and credits and getting the difference between them. On the completion of
administration, any cash balance is handed over to the residuary legatee and the entry
of this event on the credit side automatically closes the cash account. The cash balance
is however posted to the distribution account. The recording of a debit in the cash
account amounts to an acknowledgement of its receipt and is evidence of the personal
representative’s duty to account for it. For this reason, cash and bank balances should
not be discharged and moved from Estate Accounts the schedule and entered into the
cash account until such time that the personal representative is able to exercise control
over them. Personal representatives only have control over cash in the bank upon the
registration of the grant of representation with the bank. With respect to hard cash,
control is attained when actual possession of the money is obtained. It is at this point
that an appropriate entry should be made in the cash account.

4) The income account

The income account records cash transactions affecting the property, the subject of a
life interest, otherwise called a life tenancy. It is a specialized cash account limited to
records of receipts that are of an income nature. It is supplemental to the cash account,
and its format is therefore the same as that of the cash account.

5) The special income account

This is in respect of specific income meant for a beneficiary other than the tenant for
life. It applies in cases where a testator assigns the income from particular assets to
specific person or class of persons, other than the tenant for life.
 6) The apportionment account

These are necessary where need arises to apportion income or expenditure between
successive beneficiaries, say between a tenant for life and a remainder person.

7) The distribution account

This is the final account, prepared at the completion of the administration. It facilitates
the handing over of the estate to the beneficiaries or its distribution by the personal
representatives in keeping with the terms of the will or the rules of intestacy. The
preparation of the distribution account is often precipitated by some events, such as the
termination of a life interest or coming of age of a legatee or remainder man. The
distribution account brings to an end all other accounts, which are brought down and
their details entered into the distribution account either as assets or liabilities. Where
the cash account has a balance in its debit side the same will be transferred and brought
down to the asset column of the distribution account. The same process applies to any
balances in the income and special income accounts. Any winding up or legal costs are
reflected in the liability column of the distribution accounts. The net estate, which is the
difference, if any, between assets and the liabilities, is what, is available for distribution
among the beneficiaries. The next step is that the personal representatives ascertain the
beneficiaries and determine the share of each of them either from the terms of the will
or from the rules of intestacy. Money is easily apportioned and distributed, but real
property and other forms of movable assets may have to be liquidated first to facilitate
distribution.

ACCOUNTS MEANT FOR COURT PURPOSES

Normally accounts which are to be produced in court, in a pending dispute should contain an
inventory of all the assets owned by the deceased at the time of death, a list of all the debts
owing by the deceased at the time of death, an account of the deceased’s funeral and
testamentary expenses, particulars of all receipts, particulars of all payments and transfers of
assets, particulars of all assets vested in and held by the personal representatives at the time of
the account and particulars of all outstanding liabilities at the date of the accounts. Accounts
may be required to be produced for court purposes either in probate and succession causes or
in administration proceedings or in suits. In probate causes, production of an accounts may be
ordered by the court under section 45 of the Law of Succession Act to be rendered by an
alleged individual or executor at the confirmation of the grant, further under section 71 of the
Law of Succession Act and section 76 of the Law of Succession Act following the revocation of
the grant. In administration proceedings, production of accounts may be ordered under
sections 37(1) and 39 of the Civil Procedure Act.

~end~