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Your Personal Representative: Basic Duties & Responsibilities
Your Personal Representative: Basic Duties & Responsibilities
By RoseMary Reed and N. Elizabeth McCaw
The “Personal Representative” of an estate is the individual, bank or trust company that is responsible for administering the affairs of the estate. You nominate a personal representative (in the past known as an “executor”) in your will and following your death, your nominee is formally appointed as personal representative by the court. If you die without a will, then the court will appoint an administrator to perform the functions of the personal representative.
The personal representative’s main duties include:
• Identifying, taking custody of and creating an inventory of the assets of the estate.
• Determining the fair market value of estate assets.
• Identifying and contacting the decedent’s heirs and beneficiaries.
• Notifying various state and federal agencies of the decedent’s death and discontinuing automatic deposits into and debits from the decedent’s accounts.
• Opening a checking account in the name of the estate for the payment of valid debts, funeral expenses and medical bills, and expenses incurred in administering the estate.
• Receiving payments due to the decedent and the estate (such as dividends, unpaid wages and other benefits).
• Filing income and estate tax returns.
• Distributing assets to the appropriate beneficiaries.
A personal representative may have additional duties, such as selling property to pay expenses and taxes, operating a business or negotiating the terms of a purchase of the decedent’s interest in a closely held business. Although a personal representative has the authority to hire professional advisors to assist in fulfilling these duties, the personal representative will be responsible for choosing reliable and qualified advisors.
Many clients struggle to select the right personal representative. Often family members are selected because it is assumed that they will perform their duties without compensation. Some questions to consider if you are planning on nominating a family member or friend to serve as your personal representative:
• Does your candidate have enough time to handle the details of your estate? If your candidate already works full-time in a demanding job and has three small children, perhaps he or she is not the right personal representative.
• Does your candidate live in the state of Washington (or the state in which you reside)? Although it is not necessary that your personal representative be a resident of this state, it is often more convenient if he or she lives close by.
• Is your candidate elderly or infirm? Often clients will name a parent as personal representative. However, if your parents are now elderly or often ill, the responsibilities may be too burdensome for them.
• Is your candidate already familiar with your personal affairs? If not, then you should leave detailed instructions and records for your personal representative to follow.
• Does your candidate have the expertise needed to handle the administration of your estate? If your personal representative must negotiate a stock purchase on behalf of your estate, then you should choose a candidate with sufficient knowledge and skill for the task.
Some clients with more sophisticated investments, operating businesses or no family members living close by will choose a bank or trust company to administer their estates. When contemplating nominating an institutional fiduciary consider:
• Will the beneficiaries of my estate benefit from the professional investment or tax expertise of the institutional fiduciary?
• Are the fees charged by the institutional fiduciary reasonable?
• Who at the institution will be involved in the administration of my estate and will those team members work well with my family members or other beneficiaries?
An institutional fiduciary also might be a good choice if you are concerned that your beneficiaries or family members will not agree with the choices that you have made in your estate plan. Asking a single family member to referee disagreements between others or to try to mediate a family dispute is a significant burden to place on that family member. In these circumstances, all of your family members might be better served by placing an independent, impartial institutional fiduciary in the role of personal representative.
The key to avoiding disputes and making certain that your wishes are carried out is communication with your personal representative. Although it is not necessary to inform your candidate of the details of your estate plan before your death, your candidate should not be surprised after your death to learn that he or she is responsible for handling your estate. At a minimum, discuss your basic wishes with your candidate and make certain that you maintain complete and accurate records, including contact information for trusted advisors and assistants, for your personal representative.
[RoseMary Reed and N. Elizabeth McCaw are lawyers with Stokes Lawrence, P.S. in Seattle. RoseMary can be reached at 206-626-6000.
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