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Serving as a Personal Representative: What You Need to Know

Serving as a Personal Representative: What You Need to Know

Losing a loved one can be an incredibly difficult and stressful time. On top of dealing with the grief of your loss, it’s also important to consider the legal aftermath your family must face as your loved one’s estate moves through the Michigan probate courts. Estate administration and probate can become even more complex when you are named as the personal representative for a decedent’s estate.

In short, a personal representative is someone appointed by the court to control or manage property belonging to the deceased. Also known as an executor in some states, the personal representative must be impartial and fair, and will be expected to perform a long list of responsibilities at a very high level. A personal representative is a fiduciary, which means that he or she has a duty to put the estate’s interest before his or her own.

After being appointed, the personal representative is closely involved in administering the decedent’s estate, including:

  • Marshalling the assets of the estate and determining their value
  • Paying charges from the estate (including the decedent’s debts and final expenses, including taxes and amounts owed to creditors)
  • Distributing the remaining assets to the appropriate estate beneficiaries, in line with the decedent’s wishes and all relevant local laws

Who Can Serve a Personal Representative?

Often, a personal representative is named in the decedent’s will. Naming a personal representative is often a key consideration during the estate planning process. Many people name their spouse, a child, or another close family member to serve as their personal representative. For those who can’t or do not want to rely on family or friends, it is also an option to appoint a professional personal representative.

Keep in mind that, while a personal representative may be nominated in a decedent’s will, their duties and powers commence on appointment by the court, when the appropriate letters of authority have been issued. Before or after appointment, however, a person named as personal representative in a will may carry out the decedent’s written instructions relating to their body, funeral, and burial arrangements in some circumstances. In situations where there is a problem or dispute that must be addressed prior to the appointment of the personal representative, the court can appoint the individual as a “special personal representative” to handle pressing matters on an interim basis.

If the decedent does not name a personal representative in their will, one will be appointed to serve using the following order of priority:

  • The decedent’s surviving spouse, if the spouse is named as a devisee of the decedent
  • Other devisees (beneficiary of a will) of the decedent
  • The decedent’s surviving spouse (if not a devisee under the will)
  • Other heirs of the decedent
  • Someone nominated by a creditor, if the court finds the nominee suitable and a certain period of time has lapsed

A state or county public administrator may be appointed if no interested person applies or petitions for appointment, the decedent leaves no known heirs, or if the available individuals above are unsuitable in the court’s eye.

What Are the General Duties of a Personal Representative?

Broadly speaking, Michigan statutes set down that a personal representative “is under a duty to settle and distribute the decedent’s estate in accordance with the terms of a probated and effective will” and state laws, and to do so “expeditiously and efficiently as is consistent with the best interests of the estate.”

The State Bar of Michigan expands on these duties in a publication:

… a PR has many duties to carry out while holding the decedent’s property for the estate’s interested persons (i.e., creditors, taxation authorities, and beneficiaries). A PR must not only be honest and impartially fair but must also be diligent, responsible, and prudent in the completion of his or her legally imposed obligations.

A PR has a duty of loyalty and thus cannot use estate assets for personal benefit. While a PR will likely employ an attorney or other professionals to assist with the estate’s administration, the PR is still ultimately responsible for ‘getting the job done’ — regardless of whether the administration is supervised or unsupervised. It is very important that a PR timely communicate with and respond to any inquiries of beneficiaries and others who have an interest in the estate as it progresses.

Here are a few of the key duties of a personal representative to consider:

Notification of Appointment

After accepting the appointment and receiving letters of authority, one of the first duties of the personal representative is to give notice of their appointment to the decedent’s heirs and devisees, within a short period of time. Among other key details, this notice must include the name and address of the personal representative; information about whether or not the probate proceedings will be supervised by the courts; and a list of documents that the personal representative must make available to all interested parties, including:

  • A copy of the petition for the personal representative’s appointment and a copy of the will, if any, with the notice
  • A copy of the inventory
  • A copy of the settlement petition or of the closing statement
  • A copy of the account, including, but not limited to, fiduciary fees and attorney fees charged to the estate
  • If the personal representative is the state or county public administrator, a copy of any settlement statements from the sale of real property.

At the same time, the personal representative also has an obligation to notify the decedent’s spouse of their right to election, and to give notice to the friend of the court for the county in which the estate is being administered identifying the decedent’s surviving spouse and devisees (if the decedent left a will) or heirs (for an intestate estate).

Collecting, Inventorying, Managing, and Protecting Assets

Within a set window of time (typically 91 days, unless specified otherwise by court rule), the personal representative shall also prepare an inventory of property owned by the decedent at the time of death, listing it with reasonable detail, and indicating each item’s fair market value as of the date of the decedent’s death, as well as any encumbrances.

The personal representative must send a copy of the inventory to all presumptive distributees, and to all other interested persons who request it. He or she might also file the original inventory with the court, along with any other information necessary to calculate the probate inventory fee.

To help ascertain the fair market value of the property, the personal representative may employ a qualified and disinterested appraiser. If property not included in the original inventory comes to light, or if the personal representative learns that the value included in the original inventory is misleading, he or she is responsible for making a supplemental inventory or appraisal.

Unless directed otherwise by the decedent’s will, a personal representative has a right to take possession or control of the decedent’s property, if necessary for the purposes of administration.

During the estate administration process, the personal representative must take all steps reasonably necessary for the management, protection, and preservation of the estate in their possession, including paying taxes. The personal representative may also take action to recover possession of, or to determine the title to, property of the estate.

Until termination of the appointment, a personal representative has the same power over the title to estate property that an absolute owner would have; however, the representative’s duty is to manage the property for the benefit of creditors or others interested in the estate. When the sale of estate assets is  necessary, the personal representative must follow all legal requirements. For investments and businesses, the personal representative must be prudent and carefully record the details of all transactions.

If estate administration extends for longer than a year, the personal representative must prepare an annual accounting which reflects all estate transactions, and send copies to all interested persons (along with filing the reasons for the continuing administration with the court). The personal representative may also be required to provide more frequent accountings, if required by the court.

Notifying and Paying Creditors of the Estate and Tax Obligations

Upon appointment, a personal representative must publish a notice for creditors to present their claims. Creditors have certain period of time after the date of this publication to present their claims, or be forever barred.

The personal representative has the responsibility to process the payment of all valid claims of creditors, and give notice to creditors if their claims are being disallowed.

The personal representative is also responsible for filing and paying taxes on behalf of both the decedent and the estate, which may include:

  • Decedent’s federal, state, and city income tax returns
  • Gift tax returns
  • Business, sales, and payroll tax returns
  • Federal estate tax returns
  • Estate income tax returns and fiduciary tax returns

Making Distributions and Closing the Estate

Once claims against the estate have been provided for or satisfied, the personal representative will typicall distribute the remaining assets to the decedent’s beneficiaries, as set down in their will or required by law.

As the Michigan State Bar succinctly explains:

To the extent there are insufficient assets, amounts distributable to certain beneficiaries may be reduced or eliminated. If there is a question of interpreting the decedent’s will or the laws of intestate succession (if there is no will), obtaining court approval of a proposed distribution may be necessary. Prior court approval is required for estates in supervised administration before distributing any assets to estate beneficiaries.

Also, a complete or final distribution should not occur until after all tax returns and necessary tax clearances have been secured. Receipts from the estate beneficiaries and a final accounting may be required to close the estate.

To close an estate, the personal representative may file a sworn statement or petition for settlement which outlines that:

  • Notice was published and the time limited for presentation of creditors claims has expired.
  • He or she has fully administered the decedent’s estate by making payment, settlement, or other disposition of all claims that were presented, of administration and estate expenses, and of estate, inheritance, and other death taxes, including distribution of the estate property to the persons entitled.
  • If a claim remains undischarged, the statement must detail the arrangements that have been made to accommodate outstanding liabilities
  • The personal representative has furnished a full account in writing of administration to the distributees whose interests are affected by the administration. This account shall clearly state the amount paid out of the estate in fiduciary fees, attorney fees, and other professional fees.

Compensation for Personal Representatives

In Michigan, personal representatives are entitled to reasonable compensation from the estate for carrying out their many responsibilities. In order to help with estate administration matters, a personal representative may also hire an attorney, accountant, investment advisor, or other specialized agent or assistant, who may be paid from the estate.

The amount of compensation for the personal representative and their agents may be subject to review by the court, in some circumstances. These fees should not be taken until the administration of the estate is completed.

Determining the level of compensation for a personal representative can be tricky, and may come down to a number of important and unique variables — such as the number and complexity of the estate assets and the amount of time required to administer the estate, among others. A probate attorney can give you important guidance as to what is a reasonable fee for a personal representative, in order to avoid the potential for problems with the probate court.

Can a Personal Representative Be Challenged or Removed?

A personal representative can be removed at any time through a successful petition by an interested party, with cause — including heirs, devisees, creditors, or any other person that has a property right in or claim against the estate of the decedent.

The petitioner is required to give notice to the personal representative and other interested persons, as the court orders. Generally speaking, after the receipt of notice of removal proceedings, the personal representative must stop their actions, except to account, correct maladministration, or preserve the estate.

The court may remove a personal representative in circumstances when:

  • Removal is in the best interests of the estate
  • It is shown that the personal representative or the person who sought the personal representative’s appointment intentionally misrepresented material facts in a proceeding leading to the appointment
  • The personal representative disregarded a court order; became incapable of discharging the duties of office; mismanaged the estate; or failed to perform a duty pertaining to the office

In some cases, the personal representative may be held personally liable for losses caused by mistakes or oversight or by a failure to act quickly and prudently.  One more reason you should call our office now at (833) 469-4897 to discuss your role as personal representative.

A personal representative can only be removed with cause. Personal disagreements and family squabbles are not enough to justify removal. If the interested person cannot prove wrongdoing or a conflict of interest on the part of the personal representative, then the personal representative may be able to charge his or attorney’s fees to the estate.  If a disagreement has arisen it is imperative you call our office today at (833) 469-4897.

Probate and Estate Administration Can Be Complex. You Don’t Have to Go Through It All Alone

As the personal representative for an estate, there are a lot of expectations and responsibilities to face. An experienced, knowledgeable, and empathetic probate attorney can help you understand all of your legal duties and complete the administration process as quickly, efficiently, and smoothly as possible.  And if a contest should arise for the personal representative, Michigan probate attorney, Dean E. Patrick, who litigates these contested probate matters, can help the personal representative right the ship.

Whether you are looking to name a personal representative in your will; petition for the removal of a personal representative; or seek assistance and support as you assume the role of personal representative and guide an estate through the Michigan probate courts, our probate attorney Dean E. Patrick is ready to stand with you.

Mr. Patrick has years of experience as a practicing attorney and is ready to aggressively fight for you. At every step of the way, Mr. Patrick can provide reliable professional advice, explain your legal obligations as a personal representative, and make sure you complete your duties without incurring personal liability.

The Patrick & Associates, PLLC. is available 24/7. Whatever your situation, Mr. Patrick is keen on hearing your circumstance and even keener in finding a solution to a desired outcome. Contact Dean E. Patrick at his Southfield, Michigan office at (833) 469-4897 or click here to arrange your initial consultation.

This post has been prepared for general information purposes only. The information you obtain here is not, nor is it intended to be, legal advice. You should consult an attorney for advice regarding your individual situation. We invite you to contact us and welcome your calls and electronic mail.  Accessing the content of this site does not create an attorney-client relationship.  Nor, does contacting us create an attorney-client relationship. Please do not send any confidential information to us until such time as an attorney-client relationship has been established.

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