Estate accounts template: the capital, income and distribution accounts, with a worked example that balances

Estate accounts are three short statements: what the estate was worth and what was spent out of it (capital), what it earned after the death (income), and who got what (distribution). They are right only if every pound received is matched by a pound paid out. The example below balances at £375,880 a side, and its layout can be copied.

What the law asks for

No statute prescribes a form. Section 25 of the Administration of Estates Act 1925 requires a personal representative to "exhibit on oath in the court a full inventory of the estate and when so required render an account of the administration", so the accounts must be fit to hand to a court. In practice the residuary beneficiaries approve them before the final payment.

Two more reasons to keep them: HMRC can ask to see the estate's records up to 20 years after inheritance tax is paid, and form R185 (Estate Income), which tells each beneficiary their income from the estate, is filled in from the income account.

The example estate

A widow died on 15 March 2026 leaving £5,000 to a grandchild, £2,000 to a charity and the rest equally to her two children.

No inheritance tax is due here. The threshold is £325,000, and GOV.UK says it can rise to £500,000 where a home passes to children or grandchildren.

Capital account

The probate fee is GOV.UK's figure on 1 October 2026 for an estate over £5,000; the other expenses are example figures.

The £2,500 gain is under the £3,000 annual exempt amount, which personal representatives have for the tax year of death and the two that follow, so no capital gains tax is due. Above it the rate is 24%.

Income account

The rule, in HMRC's words: from 6 April 2024 estates with income of all types up to £500 "will not pay Income Tax on that income as it arises. Where income exceeds that amount, tax will be payable on the full amount." The test is run for each tax year. So £60 is untaxed, and £1,320 is taxed in full at the 20% basic rate, which is £264.

This estate can pay that £264 under HMRC's informal arrangements, by writing to HMRC, because it passes all three tests: the estate was worth less than £2.5 million at death, the total income tax and capital gains tax is under £10,000, and assets sold in any one tax year fetched less than £500,000. An estate that fails any of them must be registered, by 5 October after the tax year in which the income or gains began.

Distribution account

The check

If the totals differ, an entry is doubled or missing. The paid column should also equal the payments on the client ledger, and the ledger should end at nil. Money left on an estate file is hard to clear later: the residual balances guide explains why the SRA will not authorise a charity payment where executors are the client.

Drawing them up

1. Start the schedule of assets and debts when the file opens, at date-of-death values, and update it as each institution replies.
2. Keep capital and income apart from the first receipt. What the estate owned at death is capital; what it earns afterwards is income.
3. Split income by tax year, because the £500 test is applied to each year.
4. Advertise for creditors before distributing. Section 27 of the Trustee Act 1925 protects personal representatives who give notice with a claim period of at least two months.
5. Check the dates. Section 44 of the Administration of Estates Act 1925 says a personal representative is not bound to distribute before a year from the death, and the probate dates guide lists the claim periods that can make an early distribution unsafe.
6. Run the check table, then send the accounts for approval before paying the residue.

Approval wording

I have read the estate accounts of [name] deceased dated [date]. I approve them and accept £[amount] as my share of the residue in full. On receipt of that sum I release the executors from further claims by me in respect of the estate as shown in the accounts.

Signed, name, date.

The wording is ours, not a prescribed form; adapt it to the firm's own precedent.

A beneficiary who later uses the money to buy a property will be asked where it came from, and a letter from the firm with these accounts answers it; the source of funds guide lists that evidence.

Overlyft can set up an AI Probate Clerk that keeps the estate schedule up to date from the replies to its information requests; it does not prepare tax calculations. A supervising solicitor reviews and signs anything a tool drafts, including estate accounts. This page is general information, not legal advice.