By Dean D. Stein, CMA
This article looks at the duties and responsibilities of a Personal Representative, Executor or Executrix. The term Personal Representative has been used in place of the labels “Executor”, “Executrix” and even “Administrator”. An Administrator is the person appointed over the estate of a person who died without a Will, known as an “Intestate Estate”. In this article, we will limit our discussion to just the Personal Representative, Executor or Executrix over a “Testate Estate” which is an estate governed by a Will. We will refer to this person as the Personal Representative, (or PR) instead of Executor, which is the masculine term and Executrix, which is the feminine term.
A Personal Representative, PR, appointed over the affairs of a deceased person's Estate, known as the decedent, usually comes to that position having been nominated by the decedent in their Will, also called their Last Will and Testament. This is a very important position, and while the PR represents the Estate, they still have a duty to protect the interests of the beneficiaries to the Estate and to preserve the Estate assets for delivery to the beneficiaries. The general standard for the PR is that they must manage the Estate's assets with “the care of a prudent person dealing with the property of another.” This is what may be referred to as a “fiduciary duty.” In carrying out this duty, among other things, the PR will, except where restricted or otherwise provided for by the Will or by an order of court and subject to certain priorities:
- Perform an inventory of the Estate assets. This is usually a good idea, even if relieved of doing so by the Will.
- Gather the assets for their safe keeping pending their distribution or liquidation.
- Deposit funds collected into an Estate account, that is, an account in the name of the Estate.
- Perform, compromise, or refuse performance of the decedent's contracts.
- Abandon personal property, when in the opinion of the PR, it is valueless.
- Insure the assets of the estate against damage, loss, liability and the PR for liability as to third persons.
- Effect a fair and reasonable compromise with any debtor or obligor.
- Pay taxes, assessments and other expenses incident to the administration of the Estate.
- Employ necessary persons, including appraisers, auditors or accountants, attorneys and others.
- Prosecute or defend claims against the Estate.
- Satisfy and settle claims and distribute the Estate as provided for.
A PR may typically not “self-deal” in the assets of the Estate, may not take or sell property to themselves, without Court approval, may not “co-mingle” funds, that is deposit Estate funds into an account of their own, or otherwise generally “profit” from the Estate.
This list is not all inclusive, and other actions, such as disposing of “Real Property”, or real estate, may require prior court approval. Court approval may be sought, even where the Will provides for the PR to sell such property, for the protection that having the Court review the reasonableness of the sale can provide to the PR. Unless relieved by the Will, you may be required to post a “bond” to provide for the guarantee of reimbursement to the Estate and the heirs of any financial wrongdoing you might engage in. The bonding company, if required to pay a claim for any misdeeds of the PR, will then in turn seek restitution from the PR to the bonding company.
A PR must be particularly careful where minor children, have an interest in the Estate.
Generally, an Estate must remain open during the statutory claims period, which is typically at least six months, but may vary by state. At the end of this time period, the claims are either paid, or objected to and contested by the PR in court, and upon settlement of any and all claims issues, a final distribution of the Estate assets may proceed. If only adults are involved, this can usually be done by obtaining a consent statement from each adult, and filing the same in the Probate Court where the Estate has been opened. If minor children are involved, or all adults do not agree, or an adult receiving under the Will suffers from a mental incapacity, then a final settlement will have to be filed in the Probate Court where the Estate is being probated.
Sound like work. It is and the responsibility is great. But the reward can be great to, in knowing that you made sure the rightful persons under the Will got everything the decedent had intended for them to get. And, unless expressly prohibited by the Will, the PR is usually entitled to a fee for these efforts. While you could go it alone, you should consider selecting an attorney who will not just simply open the Estate for you, but who will stay involved and guide you in the important decisions that must be made throughout the entire process. As with most things, there is a right and efficient way to probate an estate, and all the other ways.
This article is generally based on Alabama law, the law of your state can
vary widely. This is not intended to constitute, nor should be taken by you as
legal advice and is not intended and does not create an attorney/client
Dean Stein, CMA,
is an attorney who has a Masters degree in business and is a Certified
Management Accountant (CMA).