The Duties of Personal Representatives, Executors, and Administrators

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The Duties of Personal Representatives, Executors, and Administrators

Most wills give the executor very wide discretion in handling property and the affairs of the estate, and the law permits this. But the intention of the testator as expressed in the will should always be considered, as well as the desires of the estate beneficiaries when practical. For the sake of family harmony, it is ideal to choose an executor who is both fair and respected by all parties concerned. (When there is no will, the court chooses an administrator to fulfill the same kind of duties an executor would have.)

The executor’s authority begins at probate

The executor should generally not act until the will is probated, because he or she has not been officially given authority until then. The executor should, however, pay for the funeral and take care of estate property before appointment if necessary (e.g., maintain real estate or continue to operate a business). The executor may hire, with estate funds, laborers, lawyers, accountants, and other professionals for assistance.

Notifying heirs and beneficiaries

It is a good idea for the personal representative to demonstrate openness by sending notice of what is going on to all heirs and beneficiaries. This may even be required by state law. An heir is any of a decedent’s relatives who would be in line under state law to take a part of the decedent’s estate if the decedent died without a will—e.g., a child. A beneficiary is a person, related or not, whom the decedent has specifically named in a will, insurance policy, etc., to be a taker of his or her property. Often, of course, a decedent has specifically named his heirs as the beneficiaries under his will, policy, or retirement accounts.

The personal representative’s notice should state what action is about to be taken (e.g., when an auction is planned), indicate the court where estate papers are on file, and be accompanied by a copy of the will, if any. This small courtesy can prevent suspicion and bickering and is good legal strategy, too. If a party who has received this notice has an objection but fails to come forward, it now may find it very difficult to be heard by a judge later. For this reason, a personal representative should also give individual written notice to known creditors of the decedent even though notice is published in the newspaper.

The personal representative may not give preferential treatment

If the personal representative is also a beneficiary under the will, or an heir according to law if there is no will (e.g., an adult child), he or she is absolutely forbidden to "self-deal" or give anyone preferential treatment. This is a frequent issue. Unfortunately, however, the executor is in such a privileged position that it is difficult for the law to provide a quick-enough remedy when this rule is violated. That is why it is so important to avoid this problem to begin with by writing a will and choosing an executor wisely rather than allowing the court to appoint an administrator who may not be the best person for the job. This is an argument for the use of an institutional executor such as a bank.

The personal representative is never personally responsible for claims or lawsuits against the decedent or the estate.

Note that, absent his or her own negligence or wrongdoing, the individual serving as executor or administrator is never personally responsible for satisfying claims or lawsuits against the decedent or the estate itself. But the personal representative does have a duty to gather whatever estate assets exist and to pay the decedent’s lawful obligations as far as possible. Meanwhile, the creditors, if any, have a prescribed period of time to come forward. So, the personal representative may indeed be personally liable for the debt if he or she has given away to the heirs or beneficiaries what should have gone to a creditor.

The representative must exercise care with the estate’s investments

The personal representative must also act immediately to prudently invest estate assets. The law imposes a fiduciary duty on personal representatives to act cautiously and always to have the best interests of the beneficiaries in mind. If this duty is violated and a loss or waste of assets results, the personal representative may be ordered to pay compensation personally (or as an institution) to the beneficiaries in this situation, too.

The personal representative is not held responsible for a poor return on estate investments as long as any investments chosen by him or her are appropriate. For example, if a general market downturn decreased the value of the estate portfolio of bonds and blue chip stocks, the law would not hold the personal representative responsible. By contrast, if the personal representative lost money through risky speculative investments or failed to get a reasonable return by leaving substantial assets in a checking account, these would probably be considered inappropriate, and he or she might be individually liable.

The personal representative’s fiduciary duty also requires him or her to protect and preserve estate assets. For example, if estate funds were available but the personal representative neglected to pay an insurance bill and a fire loss to the decedent’s home resulted, the personal representative might well be held liable to the beneficiaries.

The representative is entitled to compensation

A personal representative is entitled to reasonable compensation often limited to a certain percentage (e.g., 5%) of the property in the probate estate. (Extra compensation related to handling some special matter may be allowed by the court.) That does not mean the executor automatically gets that much. The fee taken is usually listed on the final report and is, therefore, subject to approval by the court. Some states have an official "reasonable" fee scale for personal representatives and probate attorneys. These may actually be higher than fees in comparable cases in states that do not have official fee scales.

An objection can be raised if the fee appears excessive, considering the time and effort actually expended. Professional fees (lawyers, accountants, appraisers) will also be allowed. These fees must be reasonable, too, but are not subject to a set limit.

Choose a personal representative with care

The personal representative has a great responsibility. A trustworthy person or institution should be named in one’s will to avoid the family strife that often follows when this choice has to be made by the court.