VI Personal Representative(PR)/Executor/Administrator Responsibilities
The Personal Representative (“PR”) is the person, bank, or trust company appointed by the judge to be in charge of the administration of the decedent’s probate estate. In Florida, the term "PR" is used instead of such terms as Executor, Administrator. No notice of the petition for administration is required. The PR has a legal duty to administer the probate estate pursuant to Florida law. Basically, not everyone is cut out nor has the time to serve in this important role. The personal representative must: (23)
Duties to perform, (while may not be all inclusive, it will give you some direction):
- First thing, get organized; create a “To Do” list with priorities. Delays will increase costs and the timeframe to settlement.
- Hopefully, you were fortunate to have spoken with the deceased prior to discuss wishes and if they are in the will, where the will is kept, a list of assets, and are there anything they don’t want to be publically to know (skeletons in the closet).
- Obtain the Final Original Will, and ALWAYS follow the terms of the Will, verbal changes will not hold up in court.
- Order “Original” Death Certificate (at least 12-15). They will go fast.
- Determine all parties with interest in the estate: Heirs, Spouse, Family, Beneficiaries, Creditors and serve “Notice of Administration” you are the PR.
- Prepare heirs to be patient. You cannot distribute assets until all expenses; creditors have been paid and have each heir sign that you no longer have any legal liability.
- Get ready for Conflicts! Your authority, mixed emotions, why is-not that.
- Probate Assets: Identify, gather, value and safeguard the decedent’s probate assets and create an Inventory.
- Inventory list of the estate submitted within 60 days of the courts issuance of the “Letters of Administration” listing each item, its market value at death, property (even if protected by homestead). Original filed with the court with copies to surviving spouse, Heirs, Beneficiaries.
- If Real Estate is Vacant: Secure and set up Property Perseveration tasks.
- If Real Estate is Occupied: Discuss with occupant their responsibilities and expense.
- If an Asset is missed, it can cause the estate to be reopened create a delay and costing more money.
- Make sure you identify Probate Assets vs Non-Probate Assets.
- Real Estate Documents to obtain –also see XI Options: Title policy, Survey, HOA docs, Mortgage info, Insurance info, Tax info, Services used, Work performed on home with receipts, Permits, NOC, Deed, Leased items agreement, Home warranties.
- Employ professionals to assist administering the Probate Estate: Attorney (Estate/Probate, Real Estate, and Eviction), CPA/Accountant, Financial Investment Adviser, and Realtor. Not hiring one, you may save some money, but also can miss deadlines and money saving opportunities.
- Custodian of the Will must provide the Clerk of Court an Original Copy of the Will (this is not opening the Probate) within 10 days of receiving information that the testator (decedent) has passed away.
- Petition to Open a Probate Estate with the Probate Court, the sooner the better (saves time and money), but there is no statute of Limitation: to start, you will need: Original Will, Original Death certificate, any codicils, Petition for Administration, Waivers of Service, Oath of PR, Notice of Confidential Information. Obtain from the court a “Letter of Testamentary” and a recorded “Letter of Administration” that will recognize you as the Personal Representative. Additional documents will be required (depending on the estate).
- Communication most important! Heirs, Professionals (Attorney, CPA/Accountant, Financial Investment Advisor, Realtor, Lender). If not; heirs will become suspicious of your action & intent.
- File PORTABILITY ELECTION! Even if not needed, heirs of the estate may be better off tax wise when they pass away; their heirs can save tax expense, not reducing the inheritance.
- Set up an Estate checking account to hold all money and pay estate related expenses that is owed to the decedent. Never-Never mix (co-mingle) the estate funds with any other account. PENALTY: Judgement against you plus 20% interest and dismissed as PR. Speak with an attorney if it’s a POD Account (“Payable-On-Death”)
- Receive payments due the estate, including interest, dividends, and other income (e.g., unpaid salary, vacation pay, and other company benefits);
- Obtain the value or appraise the estate’s assets, including Real Estate at the time of death;
- Figure out who is going to get what and how much under the Will (if there is no Will, the state’s “interstate succession laws” apply Probate code Sections 6400-6414 called intestate succession statutes);
- Creditors: -see XI Creditors. Conduct a diligent search to locate “known or reasonably ascertainable” creditors and notify them of the time by which their claims must be filed.
- Publish an official legal “Notice to Creditors” for 2 consecutive weeks to all creditors with deadlines for creditors to file claims per state law.
- Investigate the validity of all claims against the estate:
- Reject improper claims and defend suites brought on such claims
- Never ignore a claim! If found owed after the fact, you may become liable for it.
- Review Creditor claims and reject improper ones with reason and pay valid ones.
- Pay expenses:
- DO NOT Pay out inheritance too early to heirs, etc., funds may run short too quickly and need to either ask for money back, pay out of pocket or sell assets quicker and for less money than valued to cover the expenses.
- Pay Funeral expenses, outstanding debts, and valid claims.
- Pay for Administrating the estate hopefully from estate funds to pay continuing expenses (Mortgage payments, Utilities bills, Insurance, Taxes, Maintenance etc. ;
- Handle various paperwork, such as closing accounts, discontinuing utilities and charge cards, and notifying Social Security, Civil Service, and Veterans Administration of the death, Health care provider, Life Insurance,
- File Tax returns and pay income, estate and property taxes including a final federal income tax return covering the period from the beginning of the tax year to the date of death;
- With prior Court’s permission; sell or distribute remaining real and tangible property (Furniture, Art, Jewelry, Collectables, etc.) in accordance with the instructions in the Will or Judge. to the people or organizations names in the Will or to the decedent’s heirs if there is no Will;
- Never Self Deal! Selling yourself the asset and a discount. Could cause heir fights and legal issues
- File receipts for distribution and wrap up any closing details for the Estate;
- Close probate estate.
If named as the PR, you do not have to accept the job?
It is always your option to serve or decline. Even if you agree to serve you can resign later. If you do quit before the completion of probate, you may be required to provide an “accounting” for the period you served. If you decline to serve (or accept and resign later) any alternate named in the will is typically appointed by the court. If no alternate representative is named in the will or the named alternate dies or is unwilling to serve (or, of course, if a person dies without a will, the probate court will appoint someone to serve as the personal representative.
Who can be a PR?
The personal representative can be an individual or a bank or trust company, subject to certain restrictions. To qualify to serve as a personal representative, an individual must be either a Florida resident or, regardless of residence, a spouse, sibling, parent, child, or other close relative of the decedent. An individual who is not a legal resident of Florida and is not closely related to the decedent cannot serve as a personal representative.
Individuals are not qualified to act as a personal representative if they are either younger than 18, mentally or physically unable to perform the duties, or have been convicted of a felony.
A trust company incorporated under the laws of Florida, or a bank or savings and loan authorized and qualified to exercise fiduciary powers in Florida, can serve as the personal representative.
Are PR’s usually paid for their work?
It is not a requirement, but usually they are compensated. Certainly all personal expenses they incur in the management and process of settling the estate must be paid for. Typically, a personal representative earns a fee of +/- 2% of the total value of the estate for their work. This can be mandated by the courts or by law in some states and also varies moderately from state to state. Generally, this percentage diminishes as a percentage as the size of the estate increases.
All of the funds paid to the personal representative are subject to approval by the probate court. Additional fees may be allowed by the court in cases of unusual difficulty or extraordinary circumstances. On the other hand, if a personal representative does not perform their duties in an orderly or timely manner, the court may reduce or deny compensation and the Personal Representative may be held responsible for any damages caused.
If a person is both the sole beneficiary of the estate, and the estate is not subject to Federal Estate Tax, it usually does not make sense to take any fees as all fee income is subject to income tax. (The money a beneficiary receives from the estate is income tax-free.)
What happens if the PR fails to perform his or her duty?
A PR or administrator who is derelict in his or her duty is personally liable for damages caused in the administration of the estate.
Liability may arise from improperly managing the assets of the estate, failing to collect claims and moneys due the estate, overpaying claimants, selling an asset without the authority to do so, or at an inappropriate price, neglecting to file tax returns on time, distributing property to the wrong beneficiaries, etc.
This means that the PR might wind up paying for the loss out of his or her own pocket.
Can there be more than one designated PR?
You could do so by appointing co-representatives or a secondary representative. However, this could not only cause problems during probate if there is a disagreement between the representatives. Normally, one representative is all that is needed and appointing more than one should only be done where there is a specify reason to do so. A possible example might be where one person handled only the real estate aspects of probate and the other one was designated to handle all other issues. Appointing co-representatives just to protect someone’s “feelings” is almost always a bad decision and should be avoided. Often, a frank discussion with the people involved can eliminate any issues of concern and allow one person to take on the challenging role or representative without the added challenges of co-representation.
Is it necessary for the PR to live in the decedent’s state?
In Florida, it’s not a requirement, but it is usually easier – especially in regard to larger estates and real estate.