When a person dies, a petition for administration is filed and the probate court appoints a personal representative to administer the estate. At the time of appointment, the court will issue an Order Appointing Personal Representative and Letters of Administration. These documents grant the Personal Representative the authority to manage and distribute the decedents' asset. The Personal Representative assumes a responsibility to the estate, its creditors and beneficiaries. Please find below an outline of Personal Representative Duties
IDENTIFY AND CONTROL THE ASSETS OF THE ESTATE
The basic duties of the personal representative will be to collect and preserve the assets of the estate. This is often referred to as “marshaling the assets” which includes locating, valuing, and collecting the decedent’s assets. All mail and valuable documents should be gathered. Fair market valuations for real estate, personal property, household items, and any automobiles need to be obtained. The contents of the decedent’s safe deposit box should be examined to locate stock certificates, insurance policies, and other valuables. The decedent’s checking account statements, savings account, annuities, pension, and brokerage account statements should be carefully reviewed. Copies of the last three income tax returns filed by the decedent are often helpful for locating assets. Further, if the decedent owned real estate in any state, copies of the deeds and tax assessments should be obtained.
A LIST OF DOCUMENTS BENEFICIAL TO DETERMINING DECEDENT’S ASSETS
Financial statements prepared by the decedent or his/her accountant/ CPA.
Cash and undeposited checks written to the decedent.
Records of inventories prepared by decedent.
Life insurance policies.
Homeowners, casualty and liability insurance policies. These insurers need to be notified of the decedent’s Death so that claims, if any can be paid to the estate.
Medical bills. These bills may have been fully paid by the decedent and should be claimed against the decedent’s health insurance, if any.
Prior years’ income tax returns.
Benefit reports of any retirement plans, pension plans, profit sharing plans, etc.., and the beneficiary designation forms.
Gift tax returns.
Revocable and irrevocable trust agreements created by the decedent, or those where decedent has a beneficial interest.
Deeds, abstract or title insurance policies.
Mortgages and notes.
Contract for deed.
Current real property ad valorem tax statements.
Any deeds or other evidence of joint ownership of real property.
Mutual fund and other investment fund statements.
Copies of brokerage statements.
Checkbooks, savings passbooks, certificates of deposit, in other evidence deposits titles and the decedent’s name.
Title certificates for mobile homes, trailers, Automobiles, boats, motorcycles, recreational vehicles and aircraft.
Personal property that has no title such as furniture, furnishings, jewelry, guns, art, antiques and collections should be inventoried as soon as possible.
Stock certifies representing the decedent’s interest in any closely held business.
Stock purchases agreements or shareholder agreements.
Final salary, commissions, or other income payable to the decedent.
Income tax refund checks.
Medical insurance payments and premium refunds.
MAINTAINING AND MANAGING ASSETS OF THE ESTATE
The Personal Representative has full power to administer the estate consistent with the decedent’s will or any court orders. While managing the estate your duties will depend on the amount and variety of assets and liabilities. Some duties include:
A: Retaining and protecting the decedent’s assets.
B: Any estate asset that is of no benefit to the estate may be abandoned. Though rarely done, a Personal Representative can file a petition with the court and hold a hearing after notice. Please let us know if any such assets exist in this case.
C: An estate bank account should be opened using a certified copy of the Letters of Administration issued by the court and a taxpayer ID number (Estate EIN). This account should be used to deposit proceeds of asset sales, refund checks, and other cash assets of the estate. The monies deposited are used to pay debts, claims, and administration expenses. You can set up the estate account at any financial institution that is convenient for you. (Please note that most Credit Unions do not offer services for estate bank accounts.) The account should be established as “Estate of [full name of the decedent].” Prior to setting up an estate bank account, the Personal Representative should apply for a taxpayer ID number (EIN number) with the IRS. This can be done online. Our office can assist with this task, if needed.
SOCIAL SECURITY ADMINISTRATION
Contact the Social Security Administration and the Veteran’s Administration to inform them of death and apply for any death benefits or survivor benefits to which the decedent’s estate may be eligible.
POWERS OF ATTORNEY
If the decedent had a Power of Attorney during his/her life, your duty is to notify all known financial institutions of the decedent’s death so that the financial institution will not honor a power of attorney that might be presented to it.
You should determine whether the Decedent’s home, automobile, rental property and other valuables are adequately insured. As the Personal Representative you should contact the insurance companies to inform them of the death, and in some cases, request that you be added to each policy as additional insured. Please obtain copies of endorsements and Certificates of Insurance for each policy issued to the Decedent insuring real or personal property. Please also discuss this with us.
HOUSE AND PERSONAL PROPERTY
Arrangements need to be made for the secure storage of furniture, automobiles, antiques, jewelry, guns, and other assets. Consideration should be given to changing the locks on the Decedent’s residence. Water connections to washers and sinks should be turned off to avoid leaks. Vacated homes should be checked frequently to be sure they remain in good order and repair. Please keep the electric on with the thermostat set at 79 degrees. Florida is a high-humidity state. If the air is not circulating inside, mold and mildew will take hold in as little as a day. Mold and mildew mediation is expensive.
MORTGAGE, TELEPHONES, UTILITIES
The Personal Representative should verify whether any monthly payments are due on a mortgage and that association fees, and utilities are paid, if applicable.
In addition to verifying insurance, the Personal Representative needs to make sure all assets such as boats, automobiles, jet-skis, and other such recreational vehicles are secured and that nobody drives or operates any of these items during the estate proceeding. This is important in order to avoid the risk of liability to the estate in the event an accident occurs and from the item incurring damage or causing damage to someone else. The only exception is if the item must be transported for repairs or part of the sale of the item.
PERSONAL PROPERTY OF DECEDENT
The Personal Representative may distribute tangible personal property without intrinsic value to the persons entitled after taking into account any list of gifts that the decedent made. The Personal Representative should look for a separate writing referred to in the will of the decedent. Florida allows a person to make a separate writing declaring how they want their personal property distributed upon death. The Personal Representative is authorized to surrender personal items to the person or persons listed in such separate writing so long as the property will not be necessary for the purposes of administration. If the decedent had personal property belonging to another person or entity, the Personal Representative should return it promptly. It will be necessary for the attorney to prepare a receipt for any such personal property and obtain the owner’s signature prior to returning the property.
After the issuance of Letters of Administration, a personal representative shall serve a Notice of Administration on the beneficiaries or anyone who may claim an interest in the property. If there are beneficiaries of the estate, you are responsible for keeping them informed of the administration.
Using the documents found during the Personal Representative’s inspection of the decedent’s home or business and after reviewing all mail, bank statements, checkbooks, prior tax returns, and online accounts, the personal representative should ascertain all possible creditors of the decedent. Each of these creditors must then be in form of the decedent’s death by sending them a creditor’s notice prepared by the attorney.
The Notice to Creditors is published once a week for two consecutive weeks. A copy of the Notice to Creditors must be furnished to known or reasonably ascertainable creditors. If a creditor is known or reasonably ascertained by you and they are not notified, you may face personal liability for any debt not paid.
As a general rule, the personal representative should not pay any debts or claims until his or her attorney approves payment.
The Personal Representative should take charge of the decedent’s mail. Any magazine subscriptions and the like should be canceled. Bills should be promptly reviewed and creditors notified of the decedent’s death.
After reviewing the life insurance policies, those that are payable to persons other than the estate should be delivered to the named beneficiary. If the decedent had medical insurance policies the Personal Representative may need to apply for medical and hospital benefits from these insurance companies, and Medicare, as applicable.
TAXES AND TAX RETURNS
The Personal Representative may need to secure a tax identification number (EIN) for the estate by filing a SS-4 with the IRS. You should discuss this with the attorney.
An IRS Form 56 (Notice Concerning Fiduciary Relationship) is used to notify the IRS that a fiduciary has been appointed to administer the decedent’s estate. Some tax returns that are typically filed by the Personal Representative are.
1040 Federal income tax returns of the decedent.
1041 Federal income tax returns of the estate.
706 Federal estate tax return
Florida tangible tax return.
I recommend a CPA be hired to prepare all necessary returns and to assist as necessary in creating the accounting to be filed with the court at the end of the probate process.
ACCOUNTING AND RECORD-KEEPING
Since the personal representative is personally accountable for all of the assets of the estate, one of the most important duties is to maintain accurate and detailed accounting records. The size and complexity of the estate will dictate the degree of sophistication needed. The personal representative may find it necessary to employ an accountant to assist in preparing and maintaining the estate’s financial records. In most estates, the accounting records will consist at a minimum of a checkbook, and appropriate ledgers recording all deposits, receipts, and payments. This recording keeping can be done through accounting software such as Quickbooks, excel spreadsheets, or pen and paper ledgers. The accounting records describe assets received and disposed of by the personal representative during the course of administration, all disbursements to pay debts and expenses, and the balance available for distribution to the beneficiaries.
In some estates, it is imperative for the personal representative to distinguish between income and principal assets so that proper distributions of income and principal can be made. In smaller estates, it may be sufficient to handle all receipts and disbursements through a checking account, as the canceled checks and deposit slips will provide clear and sufficient records for the purposes of substantiating the final accounting, required by Fla. Prob. R. 5.400, or any other accountings. The basic purpose of maintaining the books and records of the estate is to record the financial history of the estate which serves to protect the personal representative from liability. According to Fla. Prob. R. 5.340, within sixty (60) days after issuance of letters, a personal representative shall file an inventory of the property of the estate, listing it with reasonable detail and including for each listed item its estimated fair market value at the date of the decedent’s death. Fla. Prob. R. 5.340(d), requires the personal representative to serve a copy of this Inventory on all beneficiaries.
For an additional fee, our office can provide assistance in compiling the inventory and final accounting. But ultimately it is the personal representative’s responsibility to ensure that the inventory is complete and correct and the final accounting accurately reflects all financial activity during the estate administration. If you elect to have our office compile the final accounting, you will need to provide all records of finances such as bank statements, receipts, and all documentation of transactions during the administration of the estate.
DEBTS AND EXPENSES
All debts and expenses, such as funeral expenses, taxes, fees, debts of the decedent, court costs, attorney’s fees, personal representative’s commission must be paid before the assets of the estate are distributed to the beneficiaries.
A Personal Representative has a duty to promptly settle an estate and to distribute the assets. Normally, a Final Accounting is prepared and presented to the beneficiaries for approval and must be filed with the court prior to final distribution of the estate assets unless the accounting is waived by all beneficiaries. (Please discuss with us the possibility of obtaining waivers of final accounting from beneficiaries)
Therefore, DO NOT distribute any estate assets without conferring with our office first. Evidence is required to show that partial distribution would not adversely affect payment of claims, family allowance, payment of taxes, exempt property and expenses of administration. After the creditor period has passed, the attorney will review the will or intestate statutes and advise who is entitled to distribution. The court may require that all assets be liquidated and distributed to beneficiaries pursuant to the will or intestate statutes or by a direct distribution of certain assets directly to specific beneficiaries. For this reason it is important that no distributions occur prior to consulting with the attorney.
CLOSING THE ESTATE
When all debts and taxes have been paid and the administration is completed, the Final Accounting is filed (unless waived) along with a Petition for Discharge. The Court will order a discharge of the Personal Representative allowing the estate to be closed.