Before discussing the duties, it must be defined who is called a Personal Representative (P.R). A person or a firm who is appointed to manage the assets & liabilities after the death of an individual is called a Personal Representative or an executor. The P. R not only settles the financial affairs of the decedent, but also distributes the net assets amongst the beneficiaries as directed in the last will.
The administration engaged in this process
The probate laws of a particular state administrates the work of the P.R . The P.R will inform his proceedings at regular intervals to the court through sufficient documentation. Any unsatisfied beneficiary can oppose the decisions of the P.R .
A petition can be filed into the court against him. If the accusation is proved serious & valid, the court will remove the P.R from his duties & execute a highest level open supervised administration. A lawsuit can be filed against the P.R as a BREACH OF FIDUCIARY DUTY if he fails to carry out his responsibilities unbiasedly & sincerely.
Who can be the executor
A financial firm like a bank or any trust can undertake the duties. In case of an individual, a living person, at least 19 years of age can take the responsibilities as a P.R . The selection process of P.R will consider some important rules & aspects. The decedent can nominate 2 or more to serve as a P.R in his will. The spouse of the dead person can also be the executor under some circumstances. The heir of the person has the rights being a P.R if there is no one nominated.
Requirement of probate
There will be a question that whether or not the probate process is required. Probate is a legal formality which authenticates the will & the executor's actions. It is up to the state law to execute it. However, in most of the states, probate process is inexpensive & less time consuming.
The process of settling the estate as a fiduciary
After taking charge as a P.R , these are the essential moves which have to be taken :
- Declaration process – The P.R must send information to heirs & send an application for Employer Identification Number (EIN) to IRS. The creditors must be notified through a notice 3 weeks consecutively.
- Identification & management of the assets – The P.R must gather all assets including property, investments, dividend or any other to prepare an inventory. The executor must calculate the net worth of assets at their appraised value. This process shouldn't take more than 3 months from the date of appointment as a P.R. If necessary, the P.R can take required legal steps to recover assets or to protect the assets from probable invalid claims.
- Individual bank account – The P.R should open a bank account to separate all liquid cash & for paying the dues of the estate. Before making any payment all the claims should be verified to be valid.
- Tax assessment & filing - It is important for the P.R to asses income & tax liabilities of the estate. After collecting the required documents, all state & federal tax returns must be cleared out with immediate effect. The tax returns may be classified in four categories, these are – a) The estate's income tax, b) The estate tax, c) The owner's final individual income tax & d) Gift tax (if any).
- Investment decision – P.R can invest assets for raising the net income until the closing out of the estate. At the time of closing the estate, the assets will be distributed to the beneficiaries.
- Asset distribution & closing the estate – P.R will open a checking account which reflects the estate's financial involvement & all payments. This account will be accessible to all heirs specifically. All paperwork should be completed & the remaining assets will be distributed as per the will or state's probate laws. After signing the asset release documents, the P.R should file a Swom statement for closing the estate. Court will approve the final account & the estate will be declared closed.
As a Personal Representative, the person can get the help of legal attorneys & professional accountants to ease up the duty. But at the end, it's up to the P.R to make the right decision & fulfill his duty honestly & responsibly.