When someone passes away, there are several important decisions to make regarding their estate. One of the most critical roles in this process is the personal representative. A personal representative can be an individual, like a family member or friend, or a professional, like a lawyer or an accountant. As the legal representative of the deceased, the personal representative is responsible for carrying out the decedent’s wishes as laid out in their will. That includes several specific legal powers that the personal representative must use to manage the estate properly. The blog post will discuss a personal representative’s leading legal authorities in an estate.
Has Sole Authority to Act for the Estate
A personal representative is the only person with the legal authority to act on behalf of the estate. That includes entering into contracts and taking other legal actions, such as filing or settling claims. The personal representative must make all decisions about the estate, subject to court oversight and review. The personal representative needs to understand their role and duties.
A personal representative or executor must act in good faith and with the estate’s best interests and beneficiaries in mind. When making decisions, they should seek legal advice from a lawyer for probate to help them take the appropriate action within the law. The personal representative also has the power to hire professional advisors, such as accountants, tax preparers, and attorneys, to assist in the administration of the estate.
Has a Fiduciary Obligation to Manage the Estate’s Assets Responsibly
The law requires a person serving as a representative of an estate to manage the estate’s assets responsibly. That is the fiduciary obligation. A fiduciary acts in the estate’s best interest and its beneficiaries. That means a personal representative of an estate must exercise the highest degree of care and diligence when deciding how to manage the estate’s assets. The executor must use reasonable caution and make informed decisions free from personal gain or conflict of interest.
They must create a detailed plan and keep accurate records of all transactions they make on behalf of the estate, including investments, disbursements, and income. By keeping meticulous records and adhering to fiduciary obligations, a personal representative can ensure responsible management of the estate’s assets and ultimately benefit the estate’s beneficiaries. However, a personal representative may be personally liable for damages if they fail to manage the assets properly.
Power to Transfer Assets or Sell to Pay Liabilities
The personal representative of an estate can transfer assets or sell to pay liabilities, any outstanding debts, or taxes. That includes ensuring full payment of all debts and taxes related to the estate before distributing any assets to the beneficiaries. The personal representative must also manage the estate’s funds responsibly, considering the costs associated with the administration of the estate. The personal representative must ensure that they identify and notify all estate creditors of their rights to claim from the estate.
A personal representative must address all claims of creditors according to the law, including determining whether the debts are valid. They must also deny any invalid claims. The personal representative must also file all necessary tax returns on behalf of the estate and ensure that they meet all deadlines. The personal representative is responsible for finding suitable buyers, negotiating prices, and following through with all sales transactions. The proceeds from these sales must pay any outstanding debts or taxes before distributing to the beneficiaries.
Powers to Close the Estate
When the estate is ready to close, a personal representative has the legal authority to take all the necessary steps. That includes filing paperwork with the court and obtaining court approval for the estate’s final settlement, which can be a complex process and involves several different steps. The personal representative must pay all debts and taxes, transfer property according to the will or trust document, distribute assets to the rightful heirs, and file an inventory of all estate assets before closure. In some cases, they may also need release forms from creditors who have received full payment.
The personal representative also has the critical job of protecting the estate’s interests by preventing potential disputes or legal claims against it. The personal representative must then file a petition with the probate court to show that the estate meets all requirements and can be legally closed. If the court approves, it will issue a final order known as an “order of final distribution,” which officially closes the estate and transfers all remaining assets to the beneficiaries.
Personal representatives have several critical legal powers when managing an estate. These powers include the ability to collect assets, transfer assets, sell the property to pay liabilities, close the estate, and manage the estate. They also have a fiduciary obligation to manage the estate’s assets responsibly. However, a probate lawyer will help them understand how to execute these powers and their responsibilities to help them carry out their duties responsibly. By understanding a personal representative’s legal powers and responsibilities, they can ensure that all aspects of the estate are taken care of correctly.