During the probate administration of the estate the personal representative has possession and control of all of the assets of the estate. The personal representative’s primary duty is to protect and preserve the assets and also to see that the assets are invested in a prudent and cautious manner. The persons to whom you owe these duties are, first, any creditors of the estate, and second, the beneficiaries of the estate. If your duties are improperly or negligently performed, you may have to answer to anyone who may have been harmed as a result.
Beginning the Process: The process of probate, or administration of the estate, begins with filing the original will with the Court and the preparation and filing of a petition for administration. After the probate file is opened, the judge will sign letters of administration. The attorney for the estate will provide the personal representative certified copies of the letters of administration (which are evidence of the Personal representative’s legal authority). After the letters of administration are issued, the Personal representative sends copies of the Letters to parties who may be involved or interested in the estate. Beneficiaries of the estate should be sent a copy of the Letters of Administration by certified mail.
Estate Liabilities: A primary function of probate is to give the decedent’s creditors the opportunity to be paid from estate assets. Typical creditors in a probate proceeding are the decedent’s mortgage company and health care professionals who provided medical care during the decedent’s last illness. The Personal representative must notify potential creditors of the probate by publishing a legal notice in the newspaper. The Personal representative is required to send a copy of the Letters of Administration to any party the Personal representative knows, or has reason to believe, may have a claim against the decedent and his estate.
During the early stages of administration any creditor having a claim against the estate is required to file a claim with the Court. The Court will send the Personal representative’s attorney a copy of all claims filed. At the end of this initial period, the Personal representative should review claims filed to determine whether each claim is valid . The Personal representative may object to any claim which he believes is either incorrect or invalid. Objections are either resolved by mutual agreement, or if settlement is not possible, then such disputes are resolved by the probate judge. The Personal representative must arrange for and make payment of all valid claims. Any claims not filed during this time period will not be legal obligations of the estate, and, in most instance, cannot be legally paid.
Estate Assets: The next part of probate administration involves identifying and securing assets of the estate. An important part of making certain that assets are secure is arranging for adequate insurance coverage of tangible personal property or improved real property. A list of all assets in the probate estate and their values must be filed with the court in the form of an inventory. A Personal representative should begin to compile a list of assets as soon as possible after their appointment. The asset list should be provided to the Personal representative’s attorney for preparation of the estate inventory to be filed with the probate court.
Tax Requirements: Another part of the estate proceedings is determining which tax returns the estate is required to file. Most Personal representatives will have to arrange for the filing of an income tax return for the decedent during his last year; income tax returns for the estate if the estate has more than $600 in income during its tax year; and in a minority of estates an estate tax return required by law to be filed if the total taxable estate exceed a certain valuation. In addition, if the estate owns intangibles such as stocks or certain bonds, it may be necessary to file an intangible tax return.. The Personal representative’s attorney will determine which tax returns, if any, are required to be filed. Just because the law requires that a tax return be filed does not necessarily mean that any tax is due.
Asset Management: The Personal representative is responsible to properly manage estate assets throughout the estate proceeding. Asset management includes investment of cash in bank accounts, government bonds, or other prudent forms of investment. The Personal representative must also make sure the estate pays ongoing bills including mortgages on any real estate included in the probate estate. An important consideration is liquidity management. If cash available to the estate is not sufficient, the personal representative is required to sell assets or borrow money on behalf of the estate to meet cash requirements as they arise. These cash requirements include payment of creditors, expenses of administration including legal and accounting fees, and taxes.
Distribution to Beneficiaries: Once the Personal representative or the court determines the legitimate creditor claims, and the Personal representative pays all such claims on the estate, , the next step is distribution of the probate assets to the beneficiaries named in the will. First, the Personal representative distributes estate assets to satisfy any specific bequests in the will. A specific bequest is an instruction in the will to distribute a specific asset, such as real estate, or a fixed amount of cash to one or more persons or a charity. In some cases the Personal representative will sell assets with prior court approval to get cash to pay expenses or to make bequests to the heirs.
Often estate beneficiaries will pressure the Personal representative to prematurely distribute assets of the estate. As a fiduciary, Personal representative may be held personally responsible for early distributions when the Personal representative learns later that the money distributed is need to pay estate expenses, federal taxes, or for required distributions. The Personal representative should never distribute money to an heir without first contacting their attorney.
As the probate nears its end the Personal representative will take necessary steps to close the probate case in the probate court. . In order to close the estate the law requires the Personal representative to prepare, with professional help a formal accounting. The accounting includes all legally significant activities which have occurred in the estate, evidence that creditors’ claims and taxes have been paid, and a statement that the remaining estate property has been distributed in proper shares to the person entitled to that property. The proposed accounting is made available to all the beneficiaries who have the opportunity to object. Alternatively, such formal accounting may be waived by unanimous consent of the beneficiaries. In most estates the beneficiaries waive a formal accounting because the accounting is an expensive part of estate administration. The Personal representative presents the formal accounting or waiver to the probate court. The court reviews the accounting and other legal forms involved in closing the estate, and if all forms are in order the judge will sign an order discharging the personal representative and terminating further obligations regarding the probate. This order effectively closes the probate case in court.
In addition to closing court proceedings the Personal representative must also file income tax returns which the estate is obligated to file for the year in which final settlement occurs. When the estate is closed, the estate may have had taxable income for that year or otherwise be responsible for the payment of taxes. The personal representative must retain sufficient funds to pay any taxes which may be due. If these taxes are not paid, the law permits the IRS, and in some situations, the State of Florida, to collect the taxes from the Personal representative’s personal assets
Accepting the office and trust as personal representative brings personally responsible for certain matters. The personal representative has fiduciary duties, and a Personal representative that fails in this duty may be sued by any person injured by such failure. The law requires a Personal representative to be represented by an attorney, and the Personal representative should consult their attorney before exercising any powers over estate assets.