He will then credit himself with the decreases in corpus caused by the sale of assets for less than their inventory value; he will credit himself with the amount which he has paid out in testamentary and funeral ex penses; he will also credit himself with the amount which he has paid out for debts and claims against the estate of the decedent; he will also credit himself for payments made to legatees. The balance between the total charges and total credits will disclose the bal ance of the estate in his hands on the date of the ac counting, which will be cash, or cash and unrealized assets, which are carried forward to the next account ing, or which will be distributed in such manner as the will or the court may provide.
It will be noted that the two essential elements in volved in the accounting of executors are corpus and income. Corpus is represented by the original in ventory of the estate, and the subsequent increases thereof in accordance with the provisions of law as to what constitutes corpus ; this aggregate will be subject to deduction for all of the decreases in corpus due to the sales of assets for less than their appraised value, and for all legitimate expenses of adminis tration and debts which are chargeable against it. Any further increase in the estate must of necessity be income. • If the executor will plan the accounts in the ledger in accordance with the form in which he is to make his accounting to the court, it is obvious that at the date of his accounting, the preparation of the neces sary schedules for approval of the court will be a sim ple matter, always provided, of course, that he will enter in the ledger accounts full and complete ex planations with the entry of monetary values.
7. Difficulty of differentiating between corpus and income.—It is not always an easy task to determine whether any particular cash received should be credited to corpus or to income. Inasmuch as the executor or trustee is entitled to the services of com petent counsel, the expense of which is chargeable to the estate, lie should be careful to follow the law, or in case of doubt, secure an order from the court in transactions involving differentiation of corpus from income. For example, the rules for the apportion ment of stock dividends as between corpus and in come vary in different jurisdictions. Therefore, the services of a competent attorney are in almost all cases an absolute necessity to the executor. Any
doubtful items should, of course, be charged against income, pending the final adjudication. Difficulties will also arise in the case of trustees where invest ments are made in bonds, if the purchases have been made at a premium. It is evident that if bonds are purchased at a premium the owner of the bonds will receive par only on the maturity date, and the difference between the premium paid and par will be a loss. Theoretically, at least, the amount of this loss should be charged against income received from the bonds, but in some cases it would he incorrect for the executor or trustee to charge the amortization of the premium against the income of the estate or trust. This will hold true in cases where the will specifically provides, for example, that the life tenant shall re ceive absolutely all the income of the estate.
8. Additional duties of executor.—After the ex ecutor's accounting has been approved, all the ac counts on the ledger, with the exception of the cash and other assets remaining on hand, will be closed into the estate account; the aggregate of the assets undis posed of and the cash on hand will, of course, equal the amount standing at the credit of the estate ac count.
The executor must also make the annual report required of fiduciaries by the Federal Income Tax law. Several states have adopted inheritance tax laws under which the executor is chargeable with the tax, altho the tax is levied against the beneficial in terests distributed by the will; this means that while the tax follows the property, the executor is held per sonally liable for its collection. He should therefore either receive payment of the amount assessed against any legatee, or deduct it himself in paying over the legacy.
9. Commissions of executors.—The executor's com mission is either fixed by law or determined by the court, altho in some cases, the will provides for the specific compensation which is to be paid to the execu tor. The executor, however, is not obliged to accept the compensation provided for in the will unless he so desires, but in most jurisdictions he must indicate, upon his acceptance of the trust, whether he elects to take the statutory compensation or the commissions provided by the will.