Agreeing to serve as the personal representative of an estate is a noble decision. People who create estate plans or leave behind dependent family members typically want their assets to benefit their close loved ones. Personal representatives help ensure that surviving heirs and beneficiaries inherit what they should from an estate. They carry out the instructions provided in a will and adhere to state statutes regarding estate administration.
During probate proceedings, personal representatives must communicate with creditors, tax authorities and other interested parties. They have a responsibility to fulfill the financial obligations of the decedent. Those obligations actually take precedence over the right of inheritance extended to heirs and beneficiaries in many cases.
The estate assumes debts as well as assets
The estate of a deceased individual consists of all property owned solely in their name at the time of their death. An estate can include assets ranging from financial accounts, real property and vehicles to businesses and personal collections. The estate also has to assume responsibility for all financial obligations owed by the decedent.
Credit card balances, medical debts, mortgages and student loans may all become the responsibility of the state. The personal representative has to manage the estate’s financial matters. They file tax returns and send notice to creditors. They may need to liquidate assets to cover estate obligations.
They also need to pay valid debts in the proper order of priority according to state statutes. For example, medical debts from end-of-life care typically take priority over credit card balances during estate administration. There could be income taxes due from the decedent and the estate. Larger estates may also be subject to federal estate taxes.
Personal representatives have to ensure that they properly address financial obligations in order to protect themselves from liability. If they make major mistakes, creditors or tax authorities could potentially take legal action against the personal representative. That risk of liability is why personal representatives often wait months before making the final distributions from the estate.
Having appropriate support during estate administration can help ensure that personal representatives fulfill all their responsibilities. Those who learn about the financial obligations associated with probate proceedings can avoid mistakes that could affect their position as personal representative or diminish what beneficiaries receive from the estate.
