So, you want to be a personal representative (PR) of a probate estate? Take a deep breath and then carefully read this explanation of the PR duties in Michigan.
PR Duties: Overview
A personal representative of an Estate has a duty of undivided loyalty, impartiality, care and prudence to the heirs and to creditors. The failure to properly administer the estate, or breach of any of the PR duties can result in the court suspending the powers, removal as personal representative, and/or imposition of liability.
PR Duties: Letters of Authority
The Letter of Authority issued by the Probate Court evidences the appointment as Personal Representative (sometimes referred to as the “PR”) of the estate and empowers the personal representative to act on behalf of the estate. It is important to carefully review the Letters of Authority to identify any restrictions that the court may have imposed.
PR Duties: Creditors
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 is opened, a publication should occur in the local legal newspaper for unknown creditors. The publication period is four months. 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 Personal Representative is aware of any debts or creditors of the decedent appropriate notice must be provided. 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.
PR Duties: 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.
A Personal Representative is required to prepare and serve an Inventory of the assets of the estate to all interested persons, within 91 days from the date of the issuance date of the Letters of Authority. 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. A Personal Representative is 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 of the issuance of the Letters of Authority.
PR Duties: Accounting
The Personal Representative has a duty of undivided loyalty, impartiality, care, prudence and a duty to segregate the estate assets.
A Personal Representative should keep accurate records. All deposits and/or withdrawals from the fiduciary bank account should be logged and all receipts retained for purchases made or expenses paid. A copy of the monthly bank statements should be retained. 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).
Maintain a detailed log of all activity performed as Personal Representative including the date, time and description of your activity.
PR Duties: Taxes
In certain instances, a tax return for the Estate must be filed. 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.
Lastly, in regard to taxes, it is important to ascertain whether the decedent has any outstanding income tax debts. There can be harsh consequences to both the Personal Representative and heirs if estate assets are distributed while taxes are due and owing.
PR Duties: Distributing and Closing of the Estate
Generally, 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, a Final Accounting and Schedule of Distributions will be prepared 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.
This explanation of the PR duties is only a brief summary. For a more detailed explanation, please contact The Probate Pro. We are happy to help.