If you’ve been asked to be a personal representative in a loved one’s will, you might be concerned about your liability and whether taking on this responsibility could financially backfire on you. You have nothing to worry about when it comes to financial liability. However, it is important to understand what is involved in this role and enter into it with the correct expectations.
What Is a Personal Representative?
A personal representative (called an executor in other states) is the person named in a will to take on the responsibility of ensuring the will goes through probate, that all its wishes are carried out, and that the estate is completely wrapped up. The testator (the person creating the will) does not have to ask permission to name you as a personal representative (although it is a good idea to do so). A will should also name an alternate personal representative so that if the primary person is unavailable, there is a backup in place.
Accepting a Personal Representative Nomination
The first thing to keep in mind if someone names you as a personal representative in their will is that you do not have to agree to take on the role. You are always free to decline, and you don’t need to give a reason. However, it is important to take some time to consider why the deceased chose you and why this is important to them. It is also a good idea to understand what the role involves before deciding.
Once you agree to take on the responsibility, the court will issue “letters” identifying you as the personal representative. This gives you the authority to access and manage all of the deceased’s assets.
Responsibilities of a Personal Representative
A personal representative takes on many responsibilities. While the list may seem daunting, it is important to understand that personal representatives are entitled to be paid for their time (in a reasonable amount) by the estate. They are entitled to engage an attorney that the estate will pay for. If you wish to be paid, you must keep records of your time and activities and submit them to the court.
The compensation you receive will be considered taxable income. The attorney will handle most of the legal matters and guide the personal representative through what needs to be done. Most family members decline financial compensation for acting as a personal representative since they will simply inherit the money as beneficiaries of the estate. If you choose not to be compensated, your attorney will help you file a waiver with the court.
The responsibilities of the personal representative include:
- Carrying out the deceased’s decisions about the body and burial or cremation
- Closing the estate
- Distributing assets to beneficiaries
- Filing a final tax return
- Finding and identifying all the assets of the estate
- Finding the will and ensuring it is probated
- Identifying and notifying creditors of the estate and paying all the bills of the estate
- Locating paperwork needed to process the estate (deeds, titles, tax returns, etc.)
- Protecting the assets during the probate procedure
- Providing a full accounting to the court of the assets and debts of the estate
Liability of a Personal Representative
When you take on the role of a personal representative, you are not personally liable in any way for the decedent’s debts. Creditors cannot seek payment from you personally, and you will not have to spend any of your own money. The only exception to this would be if you were a co-signor or joint debtor on a loan or a debt.
While there is no personal financial liability, it is important to understand that the role of a personal representative is considered a fiduciary role and requires you to behave honestly and reasonably.
In Colorado, you can be held liable if:
- You don’t use reasonable care in managing the estate, such as not repairing a broken window in the deceased’s home leading to water damage
- You commit a crime, such as stealing money from the estate
- You act negligently and make a mistake, such as not locating all the assets
Working with an experienced attorney can help you avoid these pitfalls and put your mind at ease that you are meeting all the necessary legal requirements.
Most estates are wrapped up within a year, and small estates can be concluded very quickly. It should be noted that it can be a time-consuming process that will require ongoing work. If you are a family member, taking on the personal representative role is often merely a formality.
As a child or spouse of the deceased, you will likely be dealing with many end-of-life matters anyhow, locating assets and evaluating belongings, and obtaining closure for the life of your loved one. If you are not a beneficiary or family member, the testator may have chosen you for this role in order to ease this burden on the family. It will take some time to locate, assess, and distribute all the property, but your attorney will guide you through the process.
If you have been asked to be a personal representative, call Burnham Law today at 303-990-5308 to discuss your responsibilities and how our skilled attorneys can assist you. Being chosen as a personal representative is a sign of trust by the person you have lost, and it is a special responsibility to carry out their last wishes.