One of the important options in preparing a will is the opportunity to nominate an individual to act as the personal representative of the estate after the maker of the will dies.
As important as this power may be, very few individuals understand the nature of the personal representative’s duties or the abilities that are required of the “PR”.
This post will attempt to present an illustrative summary of the PR’s duties and thereby demonstrate the abilities that are required of the PR.
The PR is a fiduciary
The single most important feature of the PR’s role is the status as a fiduciary. The PR stands in a position of trust toward the estate and its beneficiaries.
However, if the PR properly performs the pr’s duties, he or she cannot be held responsible for the payment of the estate’s debts. A creditor’s only claim is against the assets of the estate.
The PR’s basic duty is to gain custody and control over the assets of the estate. The PR must also pay the debts of the decedent.
The PR has the power to sell assets of the estate to raise funds that can be used to pay the debts of the estate or the decedent. These duties may include some or all of the following:
- Taking possession of the real and personal property of the decedent.
- Contacting the Social Security and Veterans’ Administration to find any pensions to which the decedent or heirs may be eligible
- Locating insurance policies and filing any proper claims for death or survivors’ benefits
- Contacting the decedent’s employer or any fraternal organization of which the decedent was a member to ascertain whether the decedent or any family members are eligible for any pension benefits
- Exploring the circumstances of the decedent’s death to determine whether any claim should be made against third parties for death benefits or workers’ compensation benefits
- Opening appropriate bank accounts for the estate for the payment of debts and expenses and to serve as a depository for any estate funds
Maintaining accounting records for the estate
Perhaps the PR’s most important duty is the proper maintenance of the estate’s financial records. Depending upon the size and complexity of the estate, the PR may decide to retain an independent accountant for assistance in managing the estate’s funds.
An independent accountant can assist the PR by ensuring that the estate’s financial situation is constantly and consistently monitored, thus defending against claims again the PR for improper management of the estate’s assets and liabilities.
The PR must also file an inventory of the estate’s assets within 60 days after the court issues letters of administration to the PR. The inventory must list the property of the estate in reasonable detail and stating an estimated fair market value as of the date of the decedent’s death.
Hiring an attorney
The PR has the power to hire an attorney to assist in the administration of the estate and to represent the estate in any litigation involving the estate’s assets. The PR is empowered to pay the attorneys’ fees out of estate assets.
As can be seen from this summary, the PR must be someone who has the ability to understand and manage financial matters. Attorneys are commonly hired to act as PRs, and many banks and other financial institutions offer PR services.