What Are the Duties of a Personal Representative?

If a relative or friend has named you to be their personal representative (or "PR"), you may feel honored by the trust they have placed in you. But you may also be concerned about what you're supposed to do (see related article, "When a Loved One Dies: Eight Important Steps").

If the "testator" -- the maker of the will -- is still alive, you have no power or duties as PR. (You may have other responsibilities to that person while they are alive, if they have given you their power of attorney or you have been appointed as their guardian or conservator, but those duties are unrelated to your appointment as PR.)

But when the testator passes away, you become responsible for managing their affairs, carrying out the instructions contained in their will (subject to state law) and, in most cases, probating their estate and hiring a probate attorney. (Estates with total gross personal property of less than $50,000 and/or total gross real property of less than $75,000 are generally not subject to probate.)

Your duties include completing and filing the estate's income tax returns; notifying creditors; taking inventory of and appraising the assets of the estate; paying appropriate creditors, taxes and administrative expenses; and preparing a final accounting and distributing the balance of the estate to the devisees.

With a few exceptions, none of the steps outlined herein requires immediate action. Tend first to your emotional and family needs, and then, when you are ready, you can start putting the decedent's affairs in order.

Take control of assets. Since you are responsible for protecting and managing the decedent's assets, such as cash, insurance, securities, jewelry, art, etc.), you should take control of them right away.

Inspect the decedent's safe deposit boxes. In Arizona, a bank must seal a safe deposit box as soon as it learns of the death of one of the parties, and access to the box is denied until the bank performs an inventory and forwards it to the Arizona Department of Revenue. Releasing the contents of a sealed box generally takes several weeks.

However, you are under no legal obligation to inform the bank of the decedent's death. If you have a key and are authorized to gain access to the box, you should go to the bank as soon as circumstances allow, make no mention of the death, open the box and remove any items as you see fit. Don't leave behind any important documents that you believe are necessary in taking care of the decedent's affairs.

If there is a chance that family members or devisees would challenge or question such actions, take someone with you when you empty the box or simply notify the bank and have it formally inventoried.

Order copies of the death certificate. To satisfy the verification requirements of insurance companies and other parties, ask the funeral home to order from the State several copies of the decedent's death certificate.

Gather all important documents. The decedent's financial and other records must be gathered for the purposes of probating the estate and preparing the decedent's and the estate's income tax returns.

The following list includes most documents and pieces of information that are commonly considered important:

• Automobile titles

• Bank statements

• Business records (if self-employed)

• Check register (current year)

• Contracts

• Life insurance policies and annuities

• Notes payable and receivable

• Pension information

• Employment information

• Real property deeds

• Retirement account statements

• Securities statements and stock certificates

• Tax return source documents (current year)

• Tax returns (last three years)

• Trust agreement

• Unpaid bills

• Will

Contact insurance companies. You will need to contact each insurance company that insured the decedent's life or provided endowment or annuity benefits to the decedent. Each company will have its own requirements for payment of death benefits, although all will require a certified copy of the death certificate. Some may also require you to submit the original policy to them before they will pay the death benefit, while others will instruct you to destroy the policy after the death benefit is paid.

Contact other companies. Contact all banks, credit unions, brokerage companies or other companies where the decedent had accounts, investments or any other financial interest. Each will have certain requirements for collecting the funds owned by the decedent.

Select an attorney. Very simple probates may be handled without the help of an attorney, but they are rare. Even in those instances, you should at least contact the attorney who prepared the decedent's will, if for no other reason than to review any documents that the attorney may have in the decedent's file.

If you decide to hire an attorney to handle the probate, you are not obligated to hire the one who prepared the decedent's will. Virtually any attorney can prepare a simple will, but it is the experienced probate attorney who can efficiently perform most of the administrative, notification and information-gathering functions described in this article.

Like all other expenses associated with managing the decedent's affairs, attorney fees and legal costs are paid from the funds of the estate.

Open probate. Despite the many horror stories and myths often associated with probate, it is generally not the arduous, complicated ordeal that many people assume it to be.

Simply described, probate is the legal process by which claims against the estate are settled, and the decedent's remaining property is distributed in accordance with the instructions contained in his or her will, all under the supervision of the probate court.

To open the probate, you – acting alone or through the estate's attorney – submit the decedent's will to the Superior Court of the county where the decedent lived, and file an "Application for Probating of Will and for Appointment of Personal Representative." In almost all cases, this can be completed without the need for a court hearing. After you are appointed, you can perform official acts on behalf of the estate.

Notify creditors. All creditors of the estate -- mortgage holders, credit card companies, anyone to whom the decedent owed money -- should be immediately notified in writing. Creditors have four months from the date you notified them to file claims, and the sooner you inform them of the death, the sooner the probate can be closed.

After all creditors have filed their claims, you pay them using the funds of the estate, in the following order of priority:

1. Administrative and legal costs, including reasonable compensation to you for serving as PR.

2. Reasonable funeral expenses.

3. Debts and taxes with preference under federal law.

4. Reasonable and necessary medical and hospital bills.

5. Debts and taxes with preference under state law.

6. All other claims.

If the total allowed claims exceed the assets of the estate, creditors are paid a pro rata share, by category. For example, if there are sufficient assets to satisfy 100% of claims in categories 1 through 5 but only 25% of claims in category 6, all creditors in category 6 will receive 25% of their claims. In this situation, devisees and heirs may not receive anything of monetary value.

If you disallow a creditor's claim, the creditor may sue the estate in Superior Court. The probate will not be closed until the court rules on the lawsuit or until you and the creditor have reached a settlement.

File tax returns and pay taxes. You are responsible for filing three different types of tax returns on behalf of the estate:

• The decedent's last individual tax return, covering the period from January 1 to the date of death. This return is due on April 15 of the year following death.

• A fiduciary tax return, for income earned by the estate between the date of death and the closing of probate.

• An estate tax return, for estates with greater than $3.5 million  in net worth.

You should not take lightly the responsibility of filing tax returns for the estate. The government can sue a PR for unpaid taxes if the PR had the power to pay them.

Distribute remaining assets. After you have paid all valid creditor claims, taxes, and legal and other administrative costs, you then distribute the decedent's assets in accordance with the will. (Undesignated assets are usually sold.)

Report on the estate's status. You have the duty to provide an annual accounting of the estate's assets and liabilities until the estate is closed. This accounting is provided to all devisees and is not necessarily filed with the court.

Close the probate. After the court has ruled the will valid and you have resolved all claims, you will pay all valid claims and costs of administration, and distribute the estate's assets to the devisees in accordance with the instructions in the will. The probate can then be closed, and your appointment ends.

There are two ways to close the probate: (1) formally, through which you provide a final accounting to all devisees and the court and ask the court to close the probate and terminate your appointment; and (2) informally, through which you make a final report to devisees and file a closing statement with the court.

If no one objects within 12 months of the filing with the court (from devisees or creditors), the probate is closed and you are released from liability.