How to Set Up a Chart of Accounts for Probate Matters
A well-organized chart of accounts is the backbone of accurate estate accounting. This guide walks you through setting up accounts that meet court requirements and make your job easier.
What is a Chart of Accounts?
A chart of accounts is the complete list of categories you use to classify transactions. Think of it as your filing system for money—every dollar that comes in or goes out gets assigned to a specific account.
The Five Account Types
1. Asset Accounts
Track what the estate owns:
Bank Accounts
- Estate Checking
- Estate Savings
- Money Market
Investment Accounts
- Brokerage Account
- IRA/Retirement Accounts
- Certificates of Deposit
Real Property
- Primary Residence
- Rental Property
- Vacant Land
Personal Property
- Vehicles
- Jewelry and Art
- Household Furnishings
- Collections
2. Liability Accounts
Track what the estate owes:
Secured Debts
- Mortgage - Primary Residence
- Mortgage - Rental Property
- Vehicle Loans
Unsecured Debts
- Credit Cards
- Personal Loans
- Medical Bills
- Utility Balances
3. Income Accounts
Track money the estate earns:
Interest and Dividends
- Bank Interest
- Bond Interest
- Stock Dividends
- Mutual Fund Distributions
Rental Income
- Rental Property Income
Other Income
- Capital Gains
- Insurance Proceeds
- Tax Refunds
4. Expense Accounts
Track money the estate spends:
Administrative Expenses
- Attorney Fees
- Executor/Administrator Fees
- Accounting Fees
- Court Filing Fees
- Appraisal Fees
Property Expenses
- Property Taxes
- Insurance Premiums
- Utilities
- Maintenance and Repairs
- HOA Fees
Final Expenses
- Funeral Costs
- Medical Bills (Final)
- Outstanding Debts Paid
Distributions
- Distributions to Beneficiaries
- Specific Bequests
5. Equity Accounts
Track the estate's net worth:
- Opening Balance Equity
- Estate Equity
- Net Income (calculated automatically)
Organizing Your Accounts
Use a Hierarchical Structure
Group related accounts together:
Assets
- Bank Accounts
- Estate Checking
- Estate Savings
- Investments
- Fidelity Brokerage
- Vanguard IRA
- Real Estate
- 123 Main Street (Primary)
- 456 Oak Avenue (Rental)
This hierarchy makes reports cleaner and helps you find accounts quickly.
Use Consistent Naming Conventions
Good names are:
- Descriptive: "Estate Checking - First National" not "Checking"
- Consistent: If one account is "Attorney Fees," don't name another "Legal Expenses"
- Specific: "Property Tax - Primary Residence" not just "Taxes"
Match Court Report Categories
Review your jurisdiction's required report format. Create accounts that map directly to required categories. This makes report generation much easier.
Setting Up Accounts: Step by Step
Step 1: Inventory Assets
List every asset the decedent owned. Create an account for each significant item or category.
Step 2: List Liabilities
Identify all debts. Create accounts for each creditor or debt type.
Step 3: Plan for Income
What income will the estate receive? Interest, dividends, rent? Create accounts for each type.
Step 4: Anticipate Expenses
What costs will you incur? Administrative, property-related, distributions? Create accounts for each category.
Step 5: Establish Equity
Create Opening Balance Equity to capture the initial estate value.
Common Mistakes to Avoid
Too Few Accounts
Using "Miscellaneous Expenses" for everything makes reports unclear and invites court questions.
Too Many Accounts
Creating separate accounts for every small item creates clutter. Group similar items.
Inconsistent Structure
Some accounts detailed, others vague. Maintain consistent granularity throughout.
Missing Opening Balances
Forgetting to set up equity accounts properly throws off your balance sheet.
Using Templates
Estate Bookkeeper provides industry-standard account templates that you can customize:
- Start with a template matching your matter type
- Add accounts for unique assets or situations
- Remove accounts you don't need
- Rename accounts to match specific assets
Templates save time and ensure you don't forget common accounts.
Conclusion
A thoughtful chart of accounts makes every other aspect of estate accounting easier—from daily transaction entry to final court reporting. Invest time upfront to set it up right.
Estate Bookkeeper includes pre-built templates and makes it easy to customize your chart of accounts for each matter's unique needs.