PERSONAL REPRESENTATIVE INSTRUCTION LETTER
This letter shall serve as an overview of your duties and responsibilities now that you have been appointed as a fiduciary of the Estate by the Court. Our office is available to answer questions and address specific issues that may arise during the administration of the Estate. Please do not hesitate to contact our office for clarity as to your role. As a fiduciary of the Estate, you have a duty of undivided loyalty, impartiality, care and prudence to the heirs and to creditors. Your failure to properly administer the estate, or breach of any duty, can result in the court suspending your powers, your removal as personal representative, and/or imposition of liability. We ask that upon review of this letter, you schedule an appointment or conference call to discuss Estate administration and the necessary steps which you must take.
Letters of Authority
You are appointed Personal Representative (PR) of the estate. The Letter of Authority issued by the Probate Court evidences your appointment as Personal Representative (sometimes referred to as the “PR”) of the estate and empowers you to act on behalf of the estate. Carefully review the Letters of Authority to identify any restrictions that the court may have imposed. If you have questions or concerns about any restrictions, please contact the office before taking any action.
Simultaneously with the preparation of this letter our office will forward copies of probate documents to the interested parties along with some statutorily required notices. By forwarding this paperwork to them, we are providing them with notice that the estate has been opened and that you have been appointed Personal Representative.
Creditors of the estate may include unsecured debt (examples include utilities, credit cards, medical bills, personal loans) and secured debt (examples include mortgages and automobile loans).
When the estate was opened, we published in the local legal newspaper for unknown creditors. The publication period is four months. I enclose a copy of the Affidavit of Publication which shows the date of the publication. Creditors have four months from the date of publication to present a claim against the estate. After that date claims of unknown creditors are forever barred.
Notice to any known creditors must be sent directly to the creditor using a specific, statutory form. This means that if you are aware of any debts or creditors of the decedent you must provide them to our office so that we may send the appropriate notice. A creditor is considered known to the Personal Representative if the Personal Representative has actual notice of the creditor or the creditor’s existence is reasonably ascertainable based on an investigation of the decedent’s available records for the 2 years immediately preceding death and upon review of the decedent’s mail following death. If any creditors file claims against the estate, our office will work to diligently to disallow and/or resolve the claim and will keep you updated as to its status. Please promptly provide us with any information regarding any known creditors.
Protecting the Assets and Preparing an Inventory
The Personal Representative is responsible for identifying, valuing, and protecting everything that the decedent owned at the time of death.
As Personal Representative, you are also required to prepare and serve an Inventory of the assets of the estate to all interested persons, within 91 days from the date your Letters of Authority are issued. The Inventory is a “snapshot” of the assets which are held in the decedent’s name at the time of death. The Inventory must list in reasonable detail all the property owned by the decedent at the time of death. You are required to submit to the Court the information necessary to calculate the probate inventory fee that is owed to the probate court within 91 days from the date your Letters of Authority are issued. Our office will prepare and file the Inventory with the probate court upon receiving the necessary information from you. Please provide a detailed description of all estate assets so that our office may timely prepare the Inventory. Upon receipt of the asset information, we will also be able to provide you with instructions on how to preserve, protect and liquidate each specific asset. This may be done by providing my office with the monthly statement related to each asset nearest to the date of death.
Fiduciary Bank Account
Often, the assets are liquidated using the Letters of Authority and the funds are deposited in a new, properly established fiduciary bank account. Prior to opening up a fiduciary account it is necessary for the estate to obtain a Tax Identification Number (TIN) with the IRS. Our office will assist in obtaining this number and in opening up the fiduciary bank account. Once the fiduciary bank account has been opened, only the decedent’s assets, or proceeds thereof, should be deposited into that account.
As Personal Representative, you have a duty of undivided loyalty, impartiality, care, prudence and a duty to segregate the estate assets.
It is imperative that you keep accurate records of all of your actions as Personal Representative. All deposits and/or withdrawals from the fiduciary bank account should be logged and all receipts retained for purchases made or expenses paid. You should retain a copy of the monthly bank statements. There should be no commingling of assets (this means that the estate assets should never be deposited with anyone else’s assets and no one else’s expenses paid from the estate’s assets).
You should maintain a detailed log of all activity performed as Personal Representative including the date, time and description of your activity if you wish to be reimbursed for your services.
In certain instances, a tax return for the Estate must be filed. If a tax return is required, we have accounting firms that we can refer you to for preparation and filing of the estate return. Accounting firms will generally charge $500.00 for a simple return. In some instances, if it is a complex estate administration, the fee could be higher. If you have an accountant you would like to use, you are free to do so, but please keep us updated as to the filing of the return. We will be happy to assist in gathering any necessary information.
Please also be advised that the Personal Representative has a duty to file the decedent’s final Federal, State and local tax returns. These tax returns must be filed by the 15th day of the fourth month after the end of the decedent’s tax year in which he or she died. This is usually April 15 of the calendar year after decedent’s death. Any tax liability must be timely paid by the Personal Representative from the estate assets.
Again, an accountant can assist in the preparation and filing of the return. The firm will generally charge $250 for a final individual return. We would ask that you attempt to locate the decedent’s personal returns for the three years pre-dating their passing and that you forward any tax statements received from third parties to this office or if you choose, directly to your accountant. Again, you may use your own accountant but please keep us updated and we will be happy to assist in gathering any necessary information.
Lastly, in regard to taxes, it is important to ascertain whether the decedent has any outstanding income tax debts. Any letters or other notices received from taxing authorities should be forwarded to this office. There can be harsh consequences to both the Personal Representative and heirs if estate assets are distributed while taxes are due and owing.
Distributing and Closing of the Estate
Legally, the estate must remain open for at least five months from the date of your appointment as Personal Representative. The estate may remain open longer as the circumstances of the particular estate dictate. When concluding administration, our office will prepare a Final Accounting and Schedule of Distributions detailing estate administration expenses, other costs and how the remaining estate assets are to be distributed between the heirs and devisees. All parties will receive a copy of the Final Accounting and Schedule of Distributions. Absent objections within a specific period of time, distribution can be made, the closing documents will be filed with the probate court and we will proceed to close the estate.
If the estate is open longer than a year from the date the Letters of Authority are issued, then we will be required to file a Notice of Continued Administration extending the administration for another year.
To recap, we request that you schedule an appointment to begin the identification of assets, preparation of the Inventory, and identification of any known creditors. I look forward to hearing from you in the near future to schedule an appointment.