In essence, then, the accounting of the executor is little more than tracing the changes from the initial inventory to the final inventory which, of course, should be reflected in the cash account. There is, however, an exception to be noted; this arises from the payment of specific legacies which are gifts of a specially designated portion of the testator's estate. The title in these legacies vests in the legatee at the date of death, but he cannot secure his gift until it is transferred to him by the executor. Such legacies are subject to inheritance taxes and may not be paid if the estate does not realize a sufficient amount to pay the debts and administration expenses.
10. Status of real property.—The statutes of most states provide for the order in which the debts against the deceased shall be paid. In most jurisdictions the statutes will provide also for a detailed list of the property which is subject to the executor's control. For example, real property does not come into the possession of the executor unless thru special provi sions in the will containing a power of sale, or un less it is necessary to sell real estate for the payment of debts. The contract made by a testator to pur chase realty is a debt of the testator, and must be paid out of the personal estate, altho the property, when paid for, will become the property of the heirs at-law. On the other hand, when the testator has entered into a contract to sell realty, he has indicated his intention of disposing of it and of converting it into personalty, and therefore the proceeds, when realized by the executor, are part of the personal tate of the testator.
11. Heirs-at-law and next-of-kin distinguished.- The personal effects of the decedent are distributed in accordance with the will of the testator ; if the tes tator left no will, distribution of the personal prop erty must be made in accordance with statutes known as the "statutes of distribution." Real property is distributed in accordance with the statutes lmown as the "statutes of descent." Those who take real prop erty are known as heirs-at-law, while those who take personal property are known as next-of-kin. Usu ally, but not necessarily, the heirs-at-law and the next of-kin are the same individuals.
The residuary estate is that portion of the personal property of the testator which he has not effectually disposed of by will, or which is left after all gifts mentioned in the will have been paid. If the will does
not contain a residuary clause providing for the dis tribution of the excess, then distribution will be made according to the statute of distribution, to the next of-kin. Further discussion of the subject of the ac counts of executors and trustees is not called for in this volume, but it should be noted that the account ing principles are not difficult, and that the account ing must follow strictly the law and the provisions of the will. No special books are required, except in the case of large estates, where it would probably be well for the executor to provide himself with a col umnar ruled cash book for the purpose of reducing the mechanical labor of posting.
12. Definition of trust.—A trust is defined as the right, enforceable in equity courts, to the beneficial enjoyment of property the legal title to which is in another person. Generally, three persons are con cerned in a trust—the creator, who originally owned both the legal and the equitable trust; the trustee to whom is given the legal title; the beneficiary, who has the equitable right to the benefits of the property.
The relation between trustee and beneficiary is known as the trust relation. The rights and liabili ties or duties of the several parties to the relation are well established in law. Many of the incidents of the relation are attributable in part or in whole to other relations, but the law recognizes differences be tween the trust and other relations that amply war rant the difference in names 'used. Thus, the agent has many of the duties of the trustee. He is said to occupy a fiduciary relation to his principal. But the agent, in making contracts, usually binds his prin cipal while the trustee binds himself. In the sec tions following, the incidents of the trust relation will be briefly explained.
13. Express and implied trusts.—Trusts may be expressed or implied. Express trusts are created by the voluntary acts of the creator. If the subject mat ter of the trust is real estate, the trust must be created in writing. If it is personal property, spoken words will serve to create the trust.
Implied trusts are created by operation of law in cases where persons who technically have a legal title are not equitably entitled to it. Suppose, for ex ample, A gets the legal title to B's property by fraud. Equity will regard A as a trustee for B's benefit.