Seven Avoidable Mistakes for Personal Representatives

In some cases, people appointed as Personal Representatives feel as if they can navigate the Probate Court process alone. Perhaps they feel as if the estate is too small to justify hiring professionals.  Or, maybe they feel as if they were entrusted to handle the estate and just don’t realize they need assistance.  If you choose to go this route, this blog article addresses some of the common pitfalls that unwary and unprepared Personal Representatives fall prey to in attempting to go it alone. 

#1: Appreciating Your Fiduciaries Duties 

When you agree to become a Personal Representative of an estate, you agreed to be held responsible for the fiduciary duties owed to others involved in the administration of the estate.  These duties are typically not set forth in the Will itself, but instead found in the laws of the state in which the Will is probated.  You are ethically bound to act in good faith and trust for the benefit of the estate. You are held to a very high standard. If you mishandle an asset and it costs the estate money, miss a deadline, or improperly distribute assets, you can be held financially responsible.

Mistakes based upon ignorance or omission will not be viewed favorably by the Court.  When you accept the responsibility of being a Personal Representative, you accept all that comes with it.  That may include allegations of negligence or neglect if a misstep occurs that could have been avoided by seeking help.   

#2: Lack of Diligence in Administering the Estate 

If you are unfamiliar with the Probate process, you are likely also to be unfamiliar with the deadlines associated with the process. Missing a deadline can cost you personally. If a party with an interest in the estate submits a valid complaint that asserts your procrastination cost them, the Court could require you to pay a surcharge. Waiting too long to begin the probate process, failing to move forward with the notice requirements, taking too long with the inventory of assets, or waiting too long to market real estate can all lead to impatient creditors and beneficiaries.  Taxes can begin to build, and estate property can become devalued.  

Perhaps the biggest mistake you can make when probating an estate is not acting with due diligence in administration. While the loss of a loved one is overwhelming, you have responsibilities to the estate that take precedent. 

#3: Not Keeping Proper Records 

If you are charged with administering an estate plan that only contained a Will, it may be a sign that the Decedent was not adequately prepared to pass on his or her estate.  It may be a challenge to find the records you need to properly perform your duties.  Even in the best of circumstances, Personal Representatives are often unaware of the specific accounting requirements of Probate administration.  This will not excuse you of your fiduciary responsibilities.  Act quickly to document the inventory of all assets.  Keep detailed records of creditor claims.  Record the distribution when the Court provides you with permission to do so, and likewise document any distribution improperly made so you have some recourse to remedy.  

#4: Distributing Assets Without Court Permission: 

If you are uneducated on the particulars of the Probate process, the beneficiaries of the estate may be equally uninformed.  Emotions can run high and loved ones can lash out in unexpected and unfair ways.  They may not understand why those assets designated for them cannot be immediately passed on to them.  They may not appreciate the requirements to adequately notice and respond to creditor claims.  

Unless the Decedent had their affairs in perfect order when they passed (which is unusual), estate administration can take many months before the Court will be able to approval a final distribution. Be wary of requesting a partial distribution before you can settle all claims, and do not distribute assets without first getting court approval. 

#5: Failing to prepare an accurate inventory of assets: In addition to notifying potential creditors, one of the significant roles of a Personal Representative is preparing an accurate inventory of the deceased’s assets. Depending on the state of the estate, this can be relatively straightforward, or it can be a daunting task. An estate with a single bank account is an easy task.  An estate with multiple categories of assets that each need to be located, secured, inventoried, and appraised can take months of work.  You may need to work with appraisers, real estate agents, and financial professionals. 

Failing to adhere to the statutory requirement of this process could not only prolong the probate process but can lead to personal liability.

#6: Mismanaging Real Estate 

In many estates, the largest asset is real estate.  The value of primary and vacation homes along with commercial property can far exceed any other single asset type.  Too often unprepared Personal Representatives are ill equipped to deal with the requirements of securing real property, controlling access, and maintaining its condition until it can be disbursed. 

As Personal Representative, you have a fiduciary responsibility to make sure all estate property gets a “fair market value.” That includes real property.  In some cases, real estate that needs to be sold is marketed too late. In others, Personal Representatives act too soon in soliciting offers. 

#7: Waiting too Long to Get Help

There is no blanket requirement that a Personal Representative hire a probate attorney, or any other professional to assist in the administration of an estate.  In some cases, the simplicity of the assets, claims, and disbursements do not require much professional assistance and a willing and diligent layperson can perform the job adequately and at a cost saving to the estate.  There is also no requirement that a Personal Representative go it alone.  If you think you need help, involving an attorney in the earliest stages can help you avoid costly mistakes and wasted time in the probate process.

Takeaway

If you are a designated or confirmed Personal Representative of an estate and struggling to figure out what you need to do, Contact CASHMAN LAW today for a free consultation to see how we might understanding your role. 

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