Serving as a personal representative or executor of an estate is a significant responsibility.
While it’s an honor, it can also be a difficult, time-consuming assignment. As a fiduciary, the personal representative is legally responsible for paying the decedent’s taxes, debts, and creditors from estate assets and then distributing the remainder according to his or her wishes as expressed in the will. The process involves a lot of research, paperwork, and deadlines, and it can cause family disagreements, as well. Knowing what’s expected makes the task easier. Although state probate laws vary, we’ve outlined the typical responsibilities in the following article.
Locating and safeguarding probate assets.
These are assets that were owned solely by the decedent that have no other way of passing to a living individual. Real estate, for instance, is often a probate asset. Life insurance and certain retirement accounts with beneficiary designations pass directly to beneficiaries, so they would be considered non-probate and would not be included in the probate estate.
Obtaining date-of-death values for probate assets.
This may include ordering appraisals of things like real property and business interests, and getting final balance statements for bank accounts.
Obtaining date-of-death values for non-probate assets.
If it appears the estate will owe estate taxes, values for these assets must also be determined. As of 2020, only gross estates valued at more than $11.58 million are subject to federal estate taxes, but some states, such as Maryland and New Jersey, also impose estate taxes. Delaware repealed its estate tax in 2018. The gross taxable estate is the total value of all the deceased owned, including probate assets and property that pass directly to living beneficiaries.
Identifying creditors and paying off debts.
This is usually accomplished by running newspaper notices to alert companies and individuals to whom the decedent might owe money that he or she passed away. The creditor can then make claims to the estate for what they are owed.
Preparing and filing tax returns.
This includes the final state and federal personal income tax returns for the last year of your loved one’s life. If the estate is significantly large or the state in which the deceased resided imposes estate taxes, these returns must also be prepared and filed.
Paying the ongoing expenses of administering the estate.
Debts, legal fees, taxes, and the operating expenses of the estate must be paid before probate closes. In some cases, the personal representative may need to sell or liquidate estate assets to raise the money that’s required.
Distributing the remaining balance of the estate to the beneficiaries.
This final step in the process typically requires filing several documents with the probate court, including: a list of the estate's probate assets, their values, and an accounting of all debts, taxes, and expenses paid. The remainder can then be dispersed per the instructions in the will.
You may be wondering if the personal representative is compensated for his or her efforts.
In addition to all out-of-pocket expenses in managing and settling the estate, the executor generally earns a fee of about 2% of the probate estate for their work. It’s important to note that this amount varies moderately in jurisdictions and generally decreases as a percentage as the size of the estate increases.
As you can see, the personal representative plays a vital role in finalizing the decedent's financial affairs.
Whether appointed by the court or designated in the will, the role is met with a myriad of tasks and challenges throughout the probate process. If you’re named the personal representative for a loved one, it’s wise to seek the counsel of an experienced estate attorney.
If you have questions or need help locating appropriate legal resources following the loss of a loved one, please contact us. Our team of caring professionals is here to assist you.
About Evan W. Smith Funeral Services: Since 2009, residents of Wilmington, Dover, and the surrounding Delaware community have relied on the caring staff at Evan W. Smith Funeral Services to help them through their darkest hours. Family-owned and operated, the company offers an array of elite funeral care services, including traditional funerals, cremations, memorials, pre-planning, and more. With decades of experience in caring for families from all cultural backgrounds and diverse walks of life, Evan W. Smith Funeral Services is committed to creating memorable, uplifting experiences that always exceed expectations. For more information, please visit www.ewsmithfs.com.