What is a Personal Representative?
A personal representative is an individual that you appoint while preparing your last will and testament. The personal representative you appoint will be the person in charge of handling your estate once you pass. This individual has vast responsibilities and powers; therefore, your personal representative should be someone that you trust. The responsibilities of your personal representative will include safeguarding your assets, paying off your debt and expenses, filing your tax returns, and distributing the balance of your estate to your beneficiaries.
Individuals usually choose their personal representative to be a family member or a close friend. However, you may appoint any individual that you feel comfortable with leaving your estate to as long as he/she is over the age of 18, not a convicted felon, and is not mentally or physically unable to handle the work.
What are the Duties of a Personal Representative?
The moment you pass away, the personal representative that you have chosen is given the power to handle your estate. The main duty of a personal representative is to identify, collect, appraise, and secure the assets of the estate. The personal representative must not only identify the common, easy to find assets, including real estate and investment, but he/she must also identify assets that are a bit less common, including company benefits and dividends.
Additionally, an estate may have funeral expenses or outstanding debts that must be paid. The second main duty of the personal representative is to pay the outstanding bills of the estate. These expenses will be taken out of the estate’s assets. A personal representative must be careful not to commingle their personal assets with that of the estate as this is a breach of fiduciary duty.
Aside from the two main duties above, a personal representative has the following duties:
- Sending a Notice of Administration providing details on how the estate will be administered,
- Publishing a Notice of Creditors to put creditors on notice of their right to be paid for debts incurred by the descendants,
- Preparing the final tax returns for the estate and paying any taxes due,
- Distributing the estate in accordance with what the decedent wishes.
After all the duties of the personal representative are completed, including distributing all the assets to the beneficiaries, the personal representative must shut the estate of the deceased down. The personal representative can wind down the estate by filing a closing statement with the court establishing that all the assets have been distributed in accordance with the will.
When can you Remove a Personal Representative?
A personal representative can either carry out all of his/her duties and wind down the estate or neglect to carry out the duties entrusted upon him/her. If this occurs, the court can remove and replace a personal representative as long as there is a cause and it is in the best interest of the estate. There is cause to remove a personal representative when he/she has:
- Breached the duty of fiduciary duty,
- Mismanaged the estate,
- Embezzled the funds of the estate,
- Become incompetent,
- Neglected the estate,
- Been removed from the state of the estate,
- Been unable to discharge his/her duties due to mental or physical incapacity,
- Been convicted of a felony, or
- Failed to comply with a court order.
If you believe that the personal representative to a certain estate must be removed, you must file a petition for removal in a court that has jurisdiction of the estate’s administration. You may only file this petition if you are an interested person in the estate, like a beneficiary or a creditor.
How does a Personal Representative Breach their Fiduciary duty?
The most common reason for removing a personal representative is for breach of fiduciary duty. A fiduciary duty is easily explained as the obligation to act in the best interest of whoever is involved, in this case the estate. When you fail to comply with these actions, you are breaching fiduciary duty. A personal representative’s fiduciary duty is the same as the fiduciary duty of a trustee. A court holds that a person may bring an action against the personal representative if he breaches his fiduciary duty by failing to administer the estate in good faith.
A personal representative may breach his fiduciary duty by acting in his sole interest, instead of in the interest of the estate and the beneficiaries. This is called a breach of the duty of loyalty. A personal representative must properly administer the decedent’s estate in the interest of the beneficiaries. This means that a personal representative must not commingle his/her personal interest and finances with the finances of the estate, there must be clear boundaries at all times. Additionally, the personal representative must not act in its sole interest, meaning that he/she cannot delay a sale of an estate’s assets, just because it is more convenient for him/her. A personal representative’s duty is to the beneficiaries at all times.
A personal representative may also breach his fiduciary duty by failing to provide beneficiaries with relevant information about the estate’s assets. If beneficiaries inquire about the assets of the estate, the personal representative must promptly respond with the information requested. It is vital that a trustee provide beneficiaries with information regarding the assets of the estate to ensure proper administration.
If you believe that a personal representative has breached his fiduciary duty, you may file a petition with the court, and if successful he/she will be personally liable to all interested persons for the damage of loss resulting from that breach.
