The words „personal representative“, „executor“ and „administrator“ all refer to the same individual: the person or company responsible for administering your estate when you pass away. In Oregon, we refer to this individual as the „personal representative“ (also known as the „PR“). Naming a PR in a will can oftentimes be a difficult decision because the client does not know what he or she is responsible for doing. We are frequently asked by clients that we’re drafting wills for „what does the personal representative, executor or administrator do?“ The same question is asked by the individual who has been appointed.
In Oregon, the personal representative is responsible for properly administering an estate’s assets. There are many steps associated with administering an estate and oftentimes the process is overwhelming.
Before an individual named in the will can begin administering an estate, the court must appoint the individual as the personal representative. This is accomplished usually by the person named in the will filing a petition with the circuit court in the county where the decedent resided or has property.
Once appointed, the personal representative must immediately take possession of all of the decedent’s assets that belong to estate. This would include real property owned by the decedent, bank accounts, stocks, bonds, and personal property. However, property jointly owned by the decedent and another individual as joint tenants with right of survivorship or with a spouse, property that has a payable on death beneficiary (life insurance, IRA or 401K), and property owned by a trust would not be considered a part of the decedent’s probate estate. The PR may need to take steps necessary to transfer this type of property to the proper beneficiaries or other owners, but it is not considered a part of the probate estate.
Although real property does not need to be formally transferred to the estate by recording a deed, the personal representative needs to take steps necessary to secure the property, update utility records, and add the estate as an additional insured of any insurance policy covering the property. Vehicles don’t need to be retitled but the estate should be named as an additional insured.
The personal representative must take all steps to ensure that money and property of the estate is kept separate from the PR’s property. Usually, the PR will open an estate checking or savings account to deposit estate funds and proceeds from the sale of estate assets. The PR cannot deposit estate funds into the PR’s own checking or savings account.
Under no circumstances should the personal representative borrow money from the estate. Additionally, the PR cannot lend estate funds or other property to any individual without permission from the court. The PR cannot give any estate funds to beneficiaries or heirs without a court order. This restriction does not apply to funds held in accounts with payable on death beneficiaries or life insurance proceeds that are directed to be distributed to specific individuals.
In addition to gathering assets, the personal representative is responsible for paying outstanding debts of the decedent and costs associated with the administration of the estate. For example, the PR can use the estate checking account to pay for utilities providing gas, electric and water to the decedent’s property, insurance covering the property, and other bills associated with the estate assets.
In order to ensure that all of the decedent’s bills and other debts are paid, the personal representative should have the decedent’s mail forwarded to the PR. The PR will also need to go through the decedent’s filing cabinets, desk, unopened mail, etc. to ensure that all bills and other debts have been paid. The PR is responsible for paying the decedent’s unpaid bills and debts. Failure to do so may result in the PR being personally liable for any unpaid bills and debts. Consequently, a diligent search for unpaid creditors is necessary.
Unpaid medical bills, funeral expenses, and unpaid credit card bills must be paid off using estate assets prior to closing an estate. Sometimes the estate assets are not sufficient to pay off all of a decedent’s bills and rules are in place governing the priority for paying the decedent’s unpaid debts and costs of administering the estate.
Checks should always be made payable to the creditor or service provider and never to the personal representative or for cash. The one exception is that a PR may reimburse himself for paying estate expenses, such as funeral expenses, using the PR’s own funds. The court will scrutinize these payments so accurate and complete receipts must be kept to prove that reimbursement is proper.
At the conclusion of administering the estate, the personal representative must provide the court with a detailed accounting. The accounting will provide a list of estate assets and their values at the beginning of the probate and at the end and a narrative of changes in the estate assets. The accounting will include a description of funds received by the estate and expenses paid by the estate. It’s important to keep detailed records of funds coming in and going out of the estate. Typically, the PR will use a spreadsheet program (Excel) or Quickbooks and enter each transaction with a detailed description of the purpose of the transaction.
After the accounting is filed with, and approved by, the court, the court will issue a judgment authorizing the personal representative to distribute any remaining estate assets to the beneficiaries designated in the decedent’s will or, if there is no will, to the decedent’s heirs.
This is a general introduction into the personal representative’s duties in administering an estate in Oregon. Different states have different requirements and procedures. Due to the complexities associated with probate, most PRs elect to hire an attorney to help them through this difficult and confusing process.
© 12/12/2011 Kevin J. Tillson of Hunt & Associates, P.C. All rights reserved.