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ESTATE ADMINISTRATION:
Responsibilities of the Personal Representative
In Maine, the person who is responsible for
administering the estate is called the Personal Representative. If the
decedent left a Last Will and Testament, the Personal Representative
typically will be the person nominated by the decedent in the Will. If the
decedent died intestate (without a Will) or if the person the decedent
nominated to serve is unable to do so, an individual will need to step
forward to serve. In either case, the Probate Court must appoint the
Personal Representative. The Personal Representative is authorized to act
after the Probate Court issues Letters of Authority.
The Personal Representative has these
responsibilities:
1. Send
Notices
As required by the Probate Code, the
Personal Representative notifies heirs and devisees of his or her
appointment.
2. Prepare Inventory
The Personal Representative identifies
and inventories the assets that belonged to the individual during life and
which become part of the probate estate. Assets that the decedent owned
upon death but which do not go through probate typically include:
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Assets owned by the decedent with
another as joint tenants with right of survivorship;
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Payable
on death (P.O.D.) accounts;
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Trust accounts;
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Life insurance and annuities with a
named beneficiary; and
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Retirement assets including IRA
accounts, other retirement accounts, and annuities with a named
beneficiary.
(Note: Even though these assets may not
be part of the probate estate, they would likely be included in the
decedent’s taxable estate for estate tax purposes.)
Assets that are subject to the probate
process may include:
-
Most assets owned by the decedent in
his or her own name;
-
Assets owned by the decedent with
another as tenants in common; and
-
Life insurance, annuities, and
retirement accounts, with no named beneficiary or which otherwise pass to
the decedent’s estate.
The Personal Representative prepares and
files an Inventory of probate assets within 90 days of being appointed.
3. Open an
Estate Account
The Personal Representative typically opens a
bank account into which assets of the estate can be deposited and income and
expenses of the estate can be managed. As explained in our article
Tax Compliance for a Decedent’s Estate,
the estate account needs its own identity for tax purposes. A tax
identification number (EIN) for the estate must be obtained from the
Internal Revenue Services.
4. Pay Allowances, Administrative
Expenses, Taxes, Claims and Debts
Before paying any debts of the estate, the
Personal Representative should satisfy any relevant homestead allowance,
exempt property, or family allowance. Then the Personal Representative
should pay costs and expenses of administering the estate, including the
Personal Representative’s fees, if any, legal fees and accounting fees,
rental and maintenance costs for estate-owned property, and court costs and
filing fees. The Personal Representative can also pay funeral expenses from
the estate.
The Personal Representative must pay, settle,
or otherwise dispose of valid claims against the estate, including bills and
debts the decedent incurred during life and any MaineCare claims.
The Personal Representative may need to file
the decedent’s final income tax return for the period from January 1st
to the date of death. And if the estate earns income, the Personal
Representative will need to file a fiduciary income tax return covering the
period from the date of death to the date the estate is closed. Depending on
the net value of the estate after expenses and other deductions, the estate
could owe federal estate tax or Maine estate tax. Large estates may also be
exposed to the generation-skipping tax. We recommend that all Personal
Representatives consult with an accountant.
5. Keep Good Records and Keep
Beneficiaries Advised
The Personal Representative must keep good
records of the business of the estate. For estate tax purposes, it may be
appropriate to get appraisals. The Personal Representative also should keep
careful records of income and deductions for tax purposes.
Before distributing the estate, the Personal
Representative will need to prepare an Accounting. The Accounting includes
information about the assets, income and expenses of the estate and about
the distribution and disposition of the assets and income.
The Personal Representative has a
responsibility to provide information to beneficiaries of the estate. Most
misunderstandings and unhappiness can be avoided if the Personal
Representative keeps interested parties informed.
6. File
Discharge of Estate Tax Lien on Real Estate
There is a relatively new procedure in
the State of Maine by which a lien is placed on real property that the
decedent owned on the date of death. The purpose of the lien is to prevent
the sale of property before any Maine estate tax is satisfied. However,
very few Maine estates owe either a federal or Maine estate tax, so usually
the Personal Representative can file a form with the Maine Revenue Service
and obtain a release of the lien.
7. Distribute
to Heirs and Devisees
When the business of the estate is
complete, the Personal Representative can finally distribute the assets. If
the decedent died intestate or there are assets of the decedent not
otherwise disposed of by a Will, the assets will be distributed to family
members in an order prescribed by the intestacy rules. Skelton Law Offices
recommends that the Personal Representative complete a detailed, written
accounting and share it with beneficiaries of the estate.
8. Close the
Estate
When the administration of a decedent’s
estate is complete, the Personal Representative can close the estate. This
may be done informally by filing a sworn statement. If no proceedings
involving the Personal Representative are pending one year after the closing
statement is filed, the appointment of the Personal Representative
terminates. Or the estate can be closed with a formal proceeding in which
the Personal Representative is discharged from his or her duties by order of
the Probate Court. |
