A Personal Representative (or "PR," formerly called an Executor) of an estate is an individual or institution designated to administer the estate of someone who has died. As a fiduciary, a PR must settle and distribute the estate of the decedent as quickly and efficiently as possible by adhering to the directions outlined in the decedent’s Will and/or the probate laws of the state where the estate is being administered.
The primary duty is to protect the estate in a manner consistent with the decedent’s wishes. Although this may appear relatively simple, it is important that the PR understand the responsibilities associated with the position. As a word of caution, failure to adhere to these duties and responsibilities can result in the filing of lawsuits against the PR for breach of fiduciary duty.
Generally speaking, a PR is responsible for collecting the assets of the estate, protecting the estate property, preparing an inventory of the property, paying various estate expenses, paying valid claims (including debts and taxes) against the estate, representing the estate in claims against others, and eventually distributing the estate property to the beneficiaries. In the event the decedent passed away with a Will, the Will may often impose additional duties on the PR.
OPENING THE ESTATE. Initially, the PR must open the estate by filing the Petition for Probate. This requires presenting certain paperwork to the applicable Court. Generally, an estimate as to the date of death value of probate assets and debts must be provided. Once the estate is opened, the PR will often obtain the necessary Letters Testamentary (if there was a Will) or Letters of Administration (if there wasn't a Will), which provide the PR with the legal authority to act on behalf of the estate.
IDENTIFY ASSETS OF THE ESTATE. Thereafter, it is important to identify and collect the assets of the estate. This includes any property of value owned by the deceased at death. For example, assets of the estate generally include real estate, business interests, checking and savings accounts, brokerage accounts, and any unpaid amounts due the deceased such as interest and dividends. Although often overlooked, to properly value the assets of the estate, an underlying responsibility of the PR is to have the assets professionally appraised. This course of action is not only essential when it is difficult to determine the value of an asset but it becomes necessary when certain assets require an appraisal by a qualified appraiser. Typically, within a certain time frame of the appointment of the PR, an Inventory must be prepared that lists the assets held by the decedent, both individually and jointly, and provide the date of death value of such assets.
OPENING THE ESTATEACCOUNT. Once the estate is properly opened, a Federal Tax ID Number should be obtained for the estate. The PR will need to present this separate Tax ID Number to a bank to open a new bank account (typically checking account) in the name of the estate. Thereafter, the PR will transfer the funds from the accounts in the decedent’s name at death to the new account in the name of the estate. Expenses, taxes, debts, and other fees in connection with the administration of the estate will be paid from this new account. Eventually, any remaining funds will be distributed to the beneficiaries of the estate along with any other remaining assets.
NOTICE TO CREDITORS. As part of the administrative duties, the PR must give notice of the decedent’s death to known creditors and potential creditors. Creditors generally have a prescribed time (four months in Washington and Idaho) in which to file claims against the decedent’s estate. Upon the expiration of this period, the PR must pay all legitimate claims against the estate. Failure to file a claim against the estate within the prescribed time frame forever bars future claims of more creditors. It should be emphasized that prior to payment, the PR should consider the validity of all claims against the estate.
TAX RETURNS. The PR is responsible for preparing and filing all applicable income tax returns on behalf of the decedent for the period of time the decedent was alive and on behalf of the decedent’s estate. It is important to remember that death terminates the decedent’s tax year and thereafter the decedent’s estate is a separate taxpayer. The PR is also responsible for paying all applicable state and federal estate taxes.
DISTRIBUTION OF ASSETS AND CLOSING THE ESTATE. Once all of the assets are collected and the claims are satisfied, the PR must distribute the assets consistent with the terms of the Will or the state’s probate laws. When the court approves the final account and the assets have been distributed, the estate is considered closed. At this point, the responsibilities of the Personal Representative end.
If you have questions regarding the estate administration process, please contact us at 253.858.5434. We represent clients throughout Washington and Idaho and are available to meet in person, by phone, or via Skype or FaceTime.