I’m a Personal Representative of an Estate in Alabama. What Are My Duties?
If you’re the next of kin of a deceased person, or have been named as an executor in a will then you’re probably wondering what you’ll be responsible for.
Put simply, your job as personal representative of an estate is to do three main things:
Distribute the balance to the appropriate people
How you accomplish those three tasks is a little more complicated, and involves several specific duties. Since estates vary widely in size and complexity, how these duties apply to a personal representative will be different from one estate to the next. Your situation may require that you take on additional responsibilities, but in general here’s what you can expect from your role in the probate process:
Fiduciary Duty of Personal Representative
As a personal representative in Alabama, you are what is called a “fiduciary,” which means that you have certain legal and ethical duties and are in a position of trust. You are acting for someone else’s benefit (the creditors and beneficiaries of the estate), not your own. Your fiduciary duty requires you to deal with the estate expeditiously, efficiently, and economically in accordance with the terms of the will (if there is one) and in a manner consistent with the best interests of the beneficiaries of the estate.
What does that mean in practice? It means that you should be honest and trustworthy. You should use good faith and act prudently to protect and preserve estate assets and to keep them from being depleted or wasted. You should not procrastinate or unduly delay the probate process, instead you should work toward closing the estate as soon as practicable after the claims period has expired. You should investigate claims against the estate before paying them. You should stay in touch with the estate attorney and keep the beneficiaries of the estate generally informed of the estate’s progress.
Prudent Man Standard vs. Special Skills
You are held to a “prudent-man” standard, meaning that you should deal with the estate the same way a “prudent person” would deal with the property of another person.
However, if you have special skills or if you were named as a personal representative on the basis of your particular skills or expertise then you are held to a standard consistent with those skills and are under a duty to use them. For example, if you are a CPA then you will be expected to use your accounting skills in the best interest of the estate and its beneficiaries.
The Role of the Estate Attorney
It’s a good idea to hire a probate attorney to help you administer the estate. However, you should remember that the real responsibility for performing the tasks of a personal representative rests entirely with you. The estate attorney is there to advise and counsel you, to prepare paperwork for the court, and to represent the estate if it becomes involved in litigation.
Your First Steps: Identifying Heirs
If the decedent died without a will (“intestate“) then one of your first and most important responsibilities will be an investigation to determine the “heirs at law.” In investigating the heirs, you want to discover:
the name, age, address and mental condition (disabled? incompetent?) of the decedent’s surviving spouse, if any;
the name, age, address and mental condition of the decedent’s children (including children born outside of marriage and adopted children);
whether the children are also children of the surviving spouse;
if the children are not also children of the surviving spouse then you need to find out the name and address of the children’s custodian;
if there are heirs who died before the decedent then you need to determine the heirs of those “predeceased heirs;”
if there are no surviving spouse or children then you need to find the name, age, address, and mental condition of the decedent’s other relatives, starting with his or her parents, siblings, nieces and nephews, and noting whether any predeceased the decedent.
If there is no spouse, no children, no living parents, no siblings, and no nieces or nephews then you will have to continue up the family tree to the grandparents and their descendants.
How do you find these people? The death certificate and obituary may name some of them, and your attorney can help you as well. Do not take this step lightly, as identifying the correct heirs in an intestate estate is crucial to an accurate administration. Failure to identify an heir-at-law can cause big problems for the estate and for you as its personal representative.
If the decedent left a will, on the other hand then there’s not much investigation to be done. The will identifies the important people for you.
Identifying and Notifying Creditors of the Estate
Another job that must be handled by the personal representative very quickly is to give notice to creditors of the estate. There are two kinds of notice in Alabama: a notice published in a local newspaper and “actual notice” given to known or reasonably discoverable creditors of the estate.
The published notice is handled by the probate court, but the estate must pay the publication costs. Your attorney will prepare the newspaper notice and give it to the probate court, which then takes care of arranging publication.
The written notice to known creditors must be sent by first class mail addressed to the last known address of anyone you know of that may have a claim against the decedent. You attorney can help you prepare the notices and you will want their help since the notice must contain specific information to be effective. If you are unsure as to whether someone is a creditor of the estate err on the side of caution and send them a notice.
Gathering Estate Assets
A personal representative of an estate has a duty to collect the assets of the Decedent and bring them into the estate. Assets you should look for include: cash on hand, uncashed checks and refunds, deposits in banks/credit unions/etc., stocks and bonds, business interests, insurance policies payable to the estate, furniture, antiques, collectibles, artwork, jewelry, vehicles, safe deposit box, and real estate.
Some of the decedent’s assets may not come into the estate. For example, you won’t have any authority over an insurance policy payable to another person instead of to the decedent’s estate or over a bank account that had a payable on death (P.O.D. designation). Similarly, real property that was owned by the decedent and another person “jointly, with right of survivorship” will pass directly that other person without estate involvement. Your attorney can help you identify which assets come into the estate and which don’t.
You may be required to file an inventory of the estate’s assets with the probate court. If the decedent had a will he likely exempted you from this responsibility. However, if the decedent died intestate then you will definitely need to file an inventory. If you later discover additional assets you will be required to file an amended inventory. Your attorney can help you prepare the paperwork, but you will be responsible for gathering and updating the information.
You should do your best to protect the estate assets after you gather them, including maintaining insurance on them if necessary. You should open a separate banking account in the name of the estate to hold estate funds. The account should be interest-bearing. You will need to get a tax ID number from the IRS in order to open the account. Your attorney or CPA can help you apply for the tax ID number. You should not commingle estate assets with assets from any other source.
You should keep an accurate ledger of all estate activity, including receipts and expenses. Keep cancelled checks and deposits with your ledger. Accurate, thorough records are important since you are a fiduciary, and they may become even more important if a dispute arises between you and a beneficiary, the court, a creditor, or any other third party.
You should not pay any debts of the estate unless a claim is filed with the probate court. Creditors generally have six months to file their claims (although the time can be extended if you did not properly give notice). If a claim is not filed within the six months then you cannot pay it. If there are not enough assets to cover all the claims then you should pay them in a certain priority. Your attorney can help you figure out which claims should be paid and in what priority.
Paying claims is not the same as paying estate expenses. For example, you can pay funeral expenses and estate attorney’s fees without them being filed as claims.
You are responsible for filing the decedent’s final income tax return. You may also be responsible for an estate tax return or an estate income tax return, depending on the size and composition of the estate assets.
Personal Representative’s Transactions with the Estate
While you may be entitled to compensation for your work as personal representative, you should not personally profit from your relationship with and knowledge of the estate. This means that there should not be any financial transactions between you as an individual and the estate without prior court approval.
Distributing Property to Heirs
After the time for creditors’ claims has passed and after you have made arrangements to handle all claims against the estate, you are in a position to settle, or close the estate. Settlement involves dividing the remaining estate assets among the beneficiaries under the will or the appropriate “heirs-at-law” if the decedent did not have a will. Your attorney will likely advise you to have each person who takes from the estate sign a document acknowledging their receipt of their share and consenting to the closure of the estate.
A Probate Attorney Can Help
Administering an estate can be a complex, time-consuming process that involves a lot of responsibility. If you have been appointed as a personal representative in an estate you should speak with your attorney to make sure you understand your duties. The attorneys of Lewis, Lewis & Falkner are ready to help counsel you through the probate process. Give us a call today at 205-553-5353 or come by our office in Tuscaloosa to discuss your situation.
Lewis, Lewis & Falkner, LLC. | Attorneys at Law | 2224 15th Street Tuscaloosa, AL 35401
Phone: +205 553 5353 | Fax: +205 553 5593
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