How to document and file receipts for payments to heirs or service providers in an estate (Maryland)

Short answer: The personal representative (executor or administrator) must keep clear, dated records and original receipts (or reliable substitutes) for every payment from estate funds. Use written receipts or invoices, copies of canceled checks or bank statements, and a clear ledger. File required accountings with the Register of Wills and with the court when requested. Keep records long enough to support periodic accountings and to respond to beneficiary questions or audits.

Detailed Answer — what Maryland fiduciaries should know

This section explains, in plain language, what to collect, how to prepare receipts, how to present them in an accounting, and where Maryland law and the Register of Wills expect documentation.

Who must keep receipts?

The personal representative (also called executor or administrator) handles estate funds and owes a duty to beneficiaries to account for receipts, disbursements, and distributions. Maryland law and Register of Wills practice expect the fiduciary to maintain complete records and produce them on demand or as part of a formal accounting. For general Maryland statutory guidance about estate administration and fiduciary duties, see Maryland Courts and the Maryland General Assembly resources: Maryland Register of Wills and Maryland General Assembly (Code & Statutes).

What records to keep for every payment

• Dated receipt or invoice showing who was paid, the payment purpose, and the amount.
• Method of payment: copy of the canceled check, bank transfer confirmation, or credit card receipt.
• Proof the service or obligation existed: contracts, bills, medical or funeral invoices, vendor statements, or bills of sale.
• Approval or authorization: a copy of the court order (if one authorized the payment), or written approval from co-fiduciary or beneficiaries when appropriate.
• Ledger entry: an entry in a running estate ledger that ties each payment to the supporting documents.

How to prepare a good receipt for heirs

When you make a distribution to an heir or beneficiary, use a simple, signed receipt that contains:

• Estate name (e.g., “Estate of Jane Doe, Deceased”)
• Personal representative’s name
• Date of payment
• Amount paid
• Reason for payment (e.g., “final distribution of 25% of residuary estate”)
• Signature of the recipient (heir or beneficiary), printed name, and relationship to decedent
• If applicable, a notation that the payment is in full/partial satisfaction of a claim or distribution

Example wording for an heir receipt: “I, John Smith, hereby acknowledge receipt of $12,500 from the Estate of Jane Doe, as partial distribution of my beneficiary share. Date: __. Signature: __.” Keep the original signed receipt in the estate file.

How to document payments to service providers

For vendors, professionals (attorneys, accountants), and contractors:

• Obtain an itemized invoice describing work done and dates.
• Pay by estate check or estate bank account; keep the canceled check or bank transfer confirmation.
• If a provider claims a lien or has priority (e.g., funeral home lien), retain copies of the lien, the contract, and receipts showing payment of liened amounts.
• Record who authorized the work and any court authorization if needed (some large or unusual payments may require prior court approval in Maryland probate practice).

Recording and presenting accountings

Maintain a clear accounting that ties each ledger line to supporting documents. Typical sections of an accounting include:

• Opening balance (cash on hand and asset list)
• Receipts (rents, sale proceeds, insurance, etc.) with source documentation
• Disbursements, each with receipt/invoice and canceled check or transfer
• Distributions to heirs, with signed receipts
• Ending balance and asset reconciliation

When you file a formal account with the Register of Wills or the court, attach copies of the key supporting documents. Registers of Wills across Maryland may provide local forms and instruction; contact the office where the estate is probated. See: Maryland Register of Wills.

Timing and retention

Keep estate records for the longer of:

• At least seven years after closing the estate (recommended), or
• Longer if the estate remains open, if litigation is pending, or if tax matters remain unresolved.

Retain originals when possible. If you must keep copies, ensure they are legible and stored securely. Consider both physical and digital backups.

Special situations

• Payments to heirs for personal loans or reimbursements: document the basis (loan agreement, receipts) and label clearly as “loan repayment” or “reimbursement.”
• Advance distributions to heirs: get signed receipts and, where appropriate, written waivers acknowledging the advance will be charged against their eventual share.
• Payments for extraordinary expenses (repairs, tax issues, litigation): keep detailed invoices, time records, and any court approvals.
• Conflicts or objections: if a beneficiary objects, document the objection and any correspondence or attempts to resolve it. Preserve the contemporaneous file.

Where Maryland law comes in

Maryland statutes and probate practice set duties for fiduciaries to keep and render accounts and to act in the estate’s best interest. The Register of Wills handles probate filings and may require accountings and receipts as part of final settlement. For statewide guidance, review Maryland Register of Wills resources and the statutes and rules available from the Maryland General Assembly and the Maryland Judiciary: https://www.mdcourts.gov/register and https://mgaleg.maryland.gov.

What to do if an heir contests a payment

Keep calm and produce documentation promptly. A complete record (invoice, canceled check, signed receipt, ledger entry) usually resolves disputes. If a contest escalates, the Register of Wills or the circuit court can adjudicate disputes about fiduciary conduct and accountings.

Helpful Hints

• Open a separate estate bank account immediately to avoid commingling personal and estate funds.
• Write clear memo lines on checks (e.g., “Estate of Jane Doe — funeral expense”).
• Number and index receipts; keep a one-page summary ledger that references each supporting document by number.
• Scan and back up records in two secure locations (cloud + external drive).
• Use standardized receipt templates for distributions to heirs; require a handwritten or digital signature at the time of payment.
• If you rely on a vendor’s invoice, make sure it is itemized and shows dates, services, and a point of contact.
• When in doubt about a large payment or an unusual expense, request written beneficiary consent or obtain court approval before paying.
• Discuss tax-sensitive payments with a tax professional; maintain records for estate tax reporting if required.
• Contact your local Register of Wills early for guidance on required forms and local practices: https://www.mdcourts.gov/register.

Disclaimer: This article explains general Maryland probate practices and recordkeeping ideas. It is educational only and does not constitute legal advice. For guidance about a specific estate or dispute, contact a qualified Maryland probate attorney or the Register of Wills in the county where the decedent lived.