So, you were asked to be the Personal Representative (PR) of an estate. It seemed like accepting was the right thing to do at the time. How hard can dividing up your parent’s lifelong savings and assets between siblings really be? Consider the following in deciding to be a PR and navigating the estate administration process.
- Are you the right person for the job? It can be a huge responsibility and often a time-consuming burden. Be sure this is right for you before you accept.
- Pull your team together. Managing the administration of an estate is a team effort. Do not go it alone.
- Retain an attorney that practices in this area. The attorney who drafted the will, developed the estate plan, and/or established estate trusts is a logical choice. The attorney will guide you through the proper legal process of administering the estate and advising you of your legal responsibilities.
- Retain a tax attorney or CPA that practices in the estate tax area to assist with estate and trust tax filing obligations and related tax consulting. This consultant will advise on estate tax return filing obligations and filing deadlines, so they are not missed and penalized. They can also advise on how to minimize estate taxes, so that more can be passed onto beneficiaries. A PR can be held personally liable for tax if estate assets are distributed to beneficiaries or to creditors while taxes remain unpaid.
- Locate a copy of the will, any estate trust documents and any amendments to these documents. Hopefully the decedent left instructions of where to find this information, and it’s not a search and rescue. The attorney and CPA can be of assistance here since they may have documents on file. Both will need copies of these documents in their role.
- Follow the will and estate trust document directives. These documents reflect the decedent’s final wishes and are a road map for the PR to follow in administering the estate. The PR and/or trustee has a fiduciary duty to follow the directives in these documents and to act in the best interest of the estate or trust.
- Prepare a detailed inventory of the of decedents assets, debts and liabilities at death. The date of death value of these items is often needed to determine the proper legal administration approach and tax filings obligations of the estate. It’s a best practice for all of us to maintain such an inventory, so it’s available to your PR at your passing. It can be very time consuming for the PR to compile this information after you are gone. The last income tax return filed by the decedent can assist the PR in compiling this information, since it lists income producing assets and interest on debts, to name a few.
- Inform that there has been a death. Once you have your arms around the estate inventory and decedent’s sources of income, inform related financial institutions, former employers, Social Security Administration, life insurance carrier, etc. of the passing. This information will prompt the custodian of the asset or payer of income to take appropriate action (ie: make account beneficiary distributions, update account to estate federal ID# vs decedent’s social security number, etc).
- Obtain authority and control over estate assets. As PR you will need to gain authority over the decedent’s assets to liquidate them to cash and/or distribute to heirs in kind. The attorney you added to your team will guide you in being formally appointed as estate representative or other avenues available to obtain the power you need to access and control a decedent’s assets.
- Paying existing and ongoing expenses. The primary duties of a personal representative are to collect the decedent’s assets, pay the decedent’s creditors and distribute the remaining assets to the heirs and beneficiaries. You are responsible, so stay on top of paying existing and ongoing estate obligations, so they do not become your obligation.
- Notify decedent’s creditors. This involves identifying and paying off creditors, and typically includes running a newspaper notice alert to potential creditors, who can then make a claim against the estate.
- Distribute the money. Once the administration process is complete and all obligations have been settled, the PR should distribute what’s left in accordance with the will and/or trust.
Following the above can point you in the right direction when it comes to navigating the estate administration process. If you have any questions on this topic, please leave a comment below, or feel free to contact me directly. I’m happy to help!