What is a Personal Representative?
A Personal Representative, often referred to as an Executor, is a person (or corporate entity) named in a Will that has the authority to handle a Decedent’s probate assets. In Minnesota, the probate laws utilize the official term “Personal Representative,” and this title is outlined in every individual’s estate plan. An individual’s Will identifies who is nominated and to be appointed as Personal Representative. If an individual dies without an estate plan (a Last Will and Testament), then Minnesota law identifies who has the right to serve as Personal Representative under the laws of intestacy and pursuant to the priority of appointment statutes under Minn. Stat. § 524.3-203. The Personal Representative is responsible for gathering and preserving the Decedent’s estate and assets for distribution to the beneficiaries of the estate as named in the Decedent’s estate planning documents or pursuant to Minnesota law.
Duties and Responsibilities
Once a Personal Representative is appointed by the Court and the Letters Testamentary or Letters of General Administration (an intestate estate) are issued, the Personal Representative inventories, administers, and accounts for the estate’s assets. The duties and responsibilities of a Personal Representative include the following:
- Gathering, collecting, and preserving the Decedent’s assets and creditors for preparation of an Inventory. The inventory captures all the probate assets, those assets titled in the Decedent’s name alone without any beneficiary or transfer/payable on death designations and including the date of death valuations for each probate asset.
- Preparing an accounting of all the assets and any including gains or losses on those assets since the Decedent’s date of death.
- Determining and providing payment of any known creditors or claimants of the estate, including funeral expenses and last known illness expenses.
- Identifying a plan of distribution based on the Decedent’s Will or the Minnesota laws of intestacy. The plan of distribution should state whether beneficiaries will receive cash or in-kind distributions.
- Management of timelines for tax returns, i.e., such as filing the “Final” Individual Income Tax Return (Form 1040), Gift Tax Returns (Form 709), Fiduciary Income Tax Returns for Estates and Trusts (Form 1041), and Estate Tax Returns (Form 706).
- Finalizing and providing the final distributions to the beneficiaries of the estate, completing and filing all final tax returns, and filing the appropriate pleadings with the probate court to close the court file.
The Fiduciary Role
As we have indicated, the Personal Representative is the person responsible for wrapping up the affairs of a deceased individual after their death. This person holds a great deal of power and with that power comes a fiduciary responsibility. Holding a fiduciary role means you have a duty to, ethically and legally, represent others in their best interest.
A Personal Representative has fiduciary duties to the beneficiaries under a will. The fiduciary relationship basically means that the Personal Representative must abide by the law and administer the estate fairly and meticulously, and all with the best interests of each of the beneficiaries in mind. The fiduciary responsibilities fit into three general categories:
- Duty of care,
- Duty of loyalty, and
- Duty of impartiality.
The duty of care requires the estate to be administered efficiently and competently. If the Personal Representative does not have the knowledge or skills to administer the estate, the duty of care requires the Personal Representative to get help and assistance from the appropriate experts, i.e. probate attorneys and accountants. The duty of loyalty requires the Personal Representative to be loyal to the beneficiaries and place their interests before their own interests. For instance, money from the estate cannot be taken from the estate for the Personal Representative’s own interests. The duty of impartiality prohibits a Personal Representative from favoring one beneficiary over another.
If a Personal Representative handles the estate administration in a way that breaches their fiduciary duties, then it may result and bring forth both civil and criminal penalties. This role is a very important one. At Kennedy & Ruhsam Law, our attorneys have experience acting in the role as a professional Personal Representative or Special Administrator for estate matters. The expertise and efficient handling of an estate for a Decedent makes Kennedy & Ruhsam Law a valuable resource for clients.
Breach of Fiduciary Duties
A Personal Representative who breaches their fiduciary duties can result in being removed from their role in the probate administration and can also be sued individually for financial harm that they may have caused through their misconduct. When beneficiaries or other persons with a legal interest in the probate administration believe the Personal Representative have not complied with their fiduciary duties, they can submit a Petition to the probate court requesting the removal of the Personal Representative. The Petition should include the legal reasons for the removal request and the final decision is then left up to the probate Judge overseeing the probate administration.
When a Personal Representative does not fulfill their fiduciary duty, they also violate the law. This means they can be charged with one or more crimes, such as theft or fraud.
It is important to remember that holding the title “Personal Representative” is very similar to holding a job. It is not a simple, leisurely walk in the park. Oftentimes, the role becomes a long road trip. Working with the experienced attorneys at Kennedy & Ruhsam Law, who specialize in estate planning and probate law, can help ease the fiduciary responsibilities and duties of a Personal Representative during a probate administration and make the job more peaceful.
For more information on the formal probate process, please contact Tina M. Johnson, RP® of Kennedy & Ruhsam Law Office: 651-262-2080 or firstname.lastname@example.org.