1. Who must keep receipts and why

The personal representative of an estate is tasked with collecting assets, paying debts and taxes, and distributing property to heirs or beneficiaries. Good records protect the personal representative from claims, make the probate court accounting easier, and help heirs understand how estate funds were used. Montana’s probate statutes set out duties and the court’s right to require accounting; see Montana Code Annotated, Title 72 (Probate and Trust Law): Mont. Code Ann., Title 72.

2. Types of payments and how they differ

• Payments to service providers: Fees to funeral homes, contractors, attorneys, accountants, appraisers, or vendors. These are estate expenses and ordinarily paid from estate funds.
• Payments or advances to heirs or beneficiaries: Loans, advances on inheritances, or interim distributions. These require careful authorization and clear documentation so they are credited against a beneficiary’s share later.
• Reimbursements to the personal representative: Claims by the personal representative for out‑of‑pocket expenses should have receipts and written approvals when required.

3. What a proper receipt should include

A receipt or supporting document should clearly show the transaction details so the court and heirs can verify it. Every receipt should include:

• Date of payment
• Payee name (person or business receiving the payment)
• Payor name (estate name and estate’s personal representative)
• Payment amount and currency
• Method of payment (check number, ACH, cash, credit card)
• Purpose or description of what was paid for (invoice number, services rendered, goods supplied)
• Invoice or contract reference when relevant
• Signature or stamp from payee when possible
• If paid to an heir, a written acknowledgment from the heir indicating the payment is an advance, reimbursement, or full distribution

4. How to create receipts and supporting records

Follow a consistent routine for every transaction:

1. Obtain an itemized invoice from each provider before paying when possible.
2. Pay by check or bank transfer and keep bank statements showing the payment. Electronic traceability is very helpful.
3. Attach the invoice to the paid check stub or to a PDF copy of the online payment confirmation.
4. If you must pay in cash, get a signed, dated receipt on company letterhead or on a receipt form and note why cash was used.
5. For payments to heirs, use a short written agreement or signed acknowledgment stating whether the payment is an advance on inheritance, a loan, or a final distribution.
6. Scan or photograph all paper receipts and store backups in two locations (cloud and local drive).

5. How to record payments in the estate accounting

Montana courts expect a personal representative to keep and, on request or at the time of final accounting, present a clear accounting of receipts and disbursements. Although specific filing schedules and form names vary by county and court, the accounting should include:

• Beginning cash balance
• All estate receipts (bank interest, sale of assets, proceeds)
• All disbursements (by date and category: funeral, taxes, administration, creditors, repairs, distributions)
• Running balance after each transaction
• Copies of invoices, paid checks, and receipts as supporting documentation

Refer to Montana’s probate statutes and your local court rules for specific accounting and filing requirements: Mont. Code Ann., Title 72. County court clerks or the district probate court can also provide local forms and deadlines.

6. When you need court authorization

Court approval is commonly required when:

• Making extraordinary expenditures (major property repairs, selling estate property, or paying large claims).
• Distributing estate funds to heirs before all creditors are paid (some distributions may require court permission).
• There is a dispute among heirs or a potential conflict of interest.

If you are unsure whether a transaction needs permission, ask the probate clerk or seek an attorney’s advice. Montana’s probate rules allow the court to supervise the personal representative’s actions and require accounting; see Mont. Code Ann., Title 72.

7. Payments to heirs — special care

Payments to heirs require clear documentation to prevent misunderstandings later:

• Always get a signed receipt from the heir that states the payment purpose (advance, distribution, loan, or reimbursement).
• If the payment is an advance on an inheritance, state how it will be credited against the heir’s eventual share.
• Do not make unequal or premature distributions without court-approved settlement or signed consent from all interested parties.

8. Sample receipt template (use for vendors or heirs)

Receipt for Payment
Date: ___________
Estate of: ______________________ (Deceased)
Personal Representative: ______________________
Payee name: ______________________
Amount paid: $__________
Payment method: (check # / ACH / cash) __________
Reason for payment: ___________________________
Invoice or contract ref: ______________________
If payment to heir: This payment is (circle): Advance / Distribution / Reimbursement / Loan
Signature of payee: ___________________  Date: _______
Notes: ___________________________________________
    

9. Retention period and backups

Keep estate records for the longer of the period required by the court or at least 6 years after closing the estate. Retain originals of wills, significant contracts, sale documents, lien releases, and tax filings. Scan and backup each record in at least two secure locations.

10. Tax and creditor considerations

• Document payments that affect estate income and deductions (e.g., attorney fees or funeral expenses) to support estate tax filings.
• Keep creditor claims and schedules. If a creditor is paid, keep their invoice plus proof of payment.
• Coordinate with the estate’s accountant or tax advisor about reporting requirements for distributions or payments to nonresident heirs.

11. Practical workflow checklist

1. Before paying, confirm authority to pay (will language, court appointment, or court order).
2. Obtain itemized invoice or contract.
3. Pay by traceable means and save bank records.
4. Attach paid invoice to the accounting entry and scanned receipt.
5. If paying an heir, use a signed acknowledgment specifying the nature of payment.
6. Update the estate ledger and reconcile monthly with bank statements.
7. Keep a folder (paper and electronic) labeled for each class of expense and each beneficiary for easy court review.