What to do when you are appointed Personal Representative of an estate.
Congratulations! Being appointed as a Personal Representative or Executor under a Will is an honor. The Testator considered you capable and honest and has entrusted his or her estate to you. Your job is to assemble assets, pay debts and make sure the Testator’s wishes as expressed in the Will are followed. Along with the honor comes a lot of work and some risk. If you make mistakes, or even if you do the right things but do not do them quickly enough, you run the risk of being sued and surcharged for any loss that the estate may have incurred.
Here are some things you need to know to minimize your risk.
- The primary duty you owe, as an estate’s Personal Representative, is loyalty to the estate and its beneficiaries. Every action taken must be for the benefit of these individuals. As Personal Representative you are entitled to reasonable compensation for the work that you do on behalf of the estate. However, you are not allowed to profit personally in any dealings with the estate. You must avoid even the appearance of such a conflict of interest.
- You have the duty to exercise care, diligence, skill and prudence in dealing with the estate’s property—the same as a “prudent person” would exercise in the conduct of his or her own affairs.
- You must identify, assemble and preserve the assets of the estate. This means that you must secure and safeguard these assets. It also means that you need to meet with an insurance agent to make sure that the estate’s assets are sufficiently insured.
- Care must be taking in the investment of estate assets. Your first duty is to protect capital and avoid undue risk. However, you also have the duty to make estate assets productive and income producing where this can be done with reasonable safety.
- You must maintain accurate records of all property and monies received, all expenditures made and all transactions on behalf of the Trust. You will need to account periodically to the beneficiaries. Your good records will be the basis for your accounting and will also be a large part of your defense in the event a beneficiary complains about your conduct in administering the estate.
- As Personal Representative you can hire others to assist you in doing your job. Attorneys, Accountants and Realtors are commonly hired by a Personal Representative. But you cannot delegate your fiduciary responsibility to any other person or firm. You have a duty to supervise and direct the people that you hire.
- Communicate! The single most important thing a Personal Representative can do to minimize misunderstanding and risk is to communicate often with the beneficiaries. Send them a monthly accounting. Inform them of all action to be taken in advance.
- Help is available. The Superior Court offers a required training course that will answer many common questions. Consult your attorney early when questions arise. If there is a dispute among the beneficiaries as to a proposed action your lawyer can help by seeking instructions from the Court. If a major transaction is contemplated, your lawyer can notice this to all beneficiaries and seek court approval.
Platt and Westby, P.C. has office locations throughout Maricopa County in Phoenix, Scottsdale, Arrowhead, Litchfield Park and Gilbert. We represent clients throughout the State of Arizona. Contact us at any time by calling 602-277-4441 or e-mail us from our website at www.plattwestby.com to schedule an initial conference should you have questions about Probate Administration or Trust Administration.