In preparing the accounts the exact relationship of the trustee to the estate (as the property in trust is called) must be kept in mind. As the owner of the property, he is a creditor of the estate (the business) just as the proprietor of the business is the creditor of that business. On the other hand, as custodian, he is a debtor, being in possession of the property of others.
In the ledger, property accounts are opened with the different classes of properties represented in the estate, which accounts are debited for the appraised value of the properties. These are known as _custodian accounts_.
A contra account representing the estate—sometimes called the capital—is opened under some such caption as _Personal Estate Account_. This account is credited with the combined values of all properties represented by the custodian accounts.
When the assets are entered and posted, the ledger accounts will appear as follows:
These asset accounts represent the value of the individual properties, while the personal estate account represents the combined values of all personal property of the estate (No. 1, No. 2, and No. 3). The personal estate is known as the _corpus_, distinguishing it from the real estate.
If the trustee, as the custodian, is called upon merely to distribute the estate to the beneficiaries, his accounting is a very simple problem. In many cases, however, he is called upon to take care of the income arising from the corpus or the real estate.
When he receives such income in the shape of cash, he debits himself as custodian through a cash account, and credits an income account under an appropriate title—as _interest account_, _rent account_, _dividend account_, etc. The account may represent the income from a specific property, or all income of a stated class. For example, rent account may represent the rents received from all properties, or there may be a separate rent account for each.
Distinguished from the income accounts, the trustee sometimes has accounts representing the sale of real estate, which must then be treated as personal property. When real estate is sold, cash is credited and an account, usually called _Sale of Real Estate_, is credited.
=4. Classification of Accounts.= A classification of the accounts of the executor naturally divides into: (a) _Personal estate account_; (b) _asset accounts_; and (c) _distributive accounts_. The personal estate account, as we have seen, is a controlling account which represents the total of all assets. It is also referred to as the capital account. It is, as well, a controlling account of the distributive accounts, and in the end exhibits a schedule of transactions in the order in which they occur.
