Management of the Estate
Once appointed, the personal representative is responsible for managing the decedent’s estate. These duties consist of identifying and collecting the decedent’s assets, paying administration expenses, taxes and decedent’s debts, and then distributing the remaining assets to the heirs in intestacy or under the will.
Inventory and appraisal
The personal representative must file an inventory that lists in reasonable detail, including an estimated value, all the property contained in the decedent’s estate. Where necessary, the personal representative may need to hire an appraiser to determine the values of certain property, such as artwork. These values determine the total value of the decedent’s estate and may have tax consequences. Occasionally, interested parties may object to the value placed on the estate, especially if the discrepancy causes a much larger tax liability.
EXAMPLE: Victor was the executor for his brother’s (Owen’s) estate. Owen was an avid art collector. Accordingly, after completing the inventory of assets, the court appointed an appraiser to value the artwork. The court’s appraisers put a value of $1,300,000 on the art collection. Victor and the other beneficiaries of the estate, his brother, Judd, and sister, Camille, disagreed with this amount and proposed hiring their own appraisers. As such, they will follow the prescribed court procedure to dispute this $1,300,000 assessment.
In addition, this process will facilitate the executor in making periodic accountings to the probate court, which is a requirement in most states.
Collection of assets
In marshalling (or gathering) the decedent’s assets, the personal representative may not co-mingle estate assets with his or her personal assets. As such, the personal representative should open a separate bank account in the name of the estate to collect those assets.
If there are any pending actions to which the decedent was a party during his lifetime, the personal representative steps into the shoes of the decedent as a substituted party in the action.
Preservation of assets
While carrying out these duties, the personal representative must exercise reasonable care in preserving the assets of the estate. When needed, the personal representative may need to insure valuable property until it can be distributed to the rightful heir.
In preserving the assets, the personal representative is normally not granted the authority to invest any of the estate’s cash, because of the possibility of losing the money. Rather, it would be more prudent for the personal representative to simply deposit any funds into the estate’s bank account for safekeeping. Yet, the personal representative does have the authority to decide which assets to liquidate and which to retain for eventual distribution to the heirs. See, e.g.,
Sale of real property
Generally, upon the decedent’s death, title to real property vests in the devisee. Yet, the executor, with court approval, has the authority to sell real property if the funds are needed to pay debts, administration expenses or higher ranking bequests to other beneficiaries.