The personal representative’s role is critical to the administration of an estate and the achievement of estate planning objectives. So your first instinct may be to name a trusted family member as personal representative (formerly known as an executor). But that might not be the best choice.
Your personal representative has a variety of important duties, including, but not limited to:
• Arranging for probate of your will (if necessary) and obtaining court approval to administer your estate,
• Taking inventory of — and collecting, recovering or maintaining — your assets, including life insurance proceeds and retirement plan benefits,
• Obtaining valuations of your assets,
• Preparing a schedule of assets and liabilities,
• Arranging for the safekeeping of personal property,
• Contacting your beneficiaries to advise them of their entitlements under your will,
• Paying any debts incurred by you or your estate and handling creditors’ claims,
• Defending your will in the event of litigation,
• Filing tax returns on behalf of your estate, and
• Distributing your assets among your beneficiaries according to the terms of your will.
Typically, many family members lack the skills and time to handle all of these tasks on their own. They’re entitled, of course, to hire accountants, attorneys, financial planners and other advisors — at the estate’s expense — for assistance. But even with professional help, serving as personal representative is a big job that requires a substantial time commitment during an already stressful period. Plus, if the personal representative is also a beneficiary of your will, other beneficiaries may view that as a conflict of interest. Or, in the case of difficult beneficiaries, a family member might be reluctant to become involved in having to deal with such beneficiaries. In many cases, the period following the death of a parent is not the time during which siblings are the most likely to be on their best behavior.
There are a few alternatives
So, what are your options? One is to name a trusted advisor, such as an accountant or lawyer, as personal representative. Another is to appoint an advisor and a family member as co-personal representatives. The advisor would handle most of the personal representative’s day-to-day responsibilities, while your family member would oversee the process and ensure that the advisor acts in your family’s best interests. Another option is to hire a professional fiduciary, such as a Bank or Trust Company, which specializes in dealing with the settlement of estates. Even if you choose to appoint a family member as the personal representative, we recommend designating a Bank or Trust Company as a successor, in the event that unforeseen problems arise between the family Personal Representative and the beneficiaries or, in the event the family personal representative becomes overwhelmed by the responsibilities of his or her role.
We can help you decide who would best serve as your estate’s personal representative. Please contact us with questions.