Personal Representatives

Transcription

1 Personal Representatives DISCLAIMER: THE PURPOSE OF THIS CLASS IS TO PROVIDE YOU WITH INFORMATION TO ASSIST YOU IN COMPLETING YOUR DUTIES AS PERSONAL REPRESENTATIVE. IT IS NOT MEANT AS A SUBSTITUTE FOR WORKING WITH YOUR ATTORNEY; THE INSTUCTORS ARE NOT ABLE TO GIVE LEGAL ADVICE. 1. PURPOSE OF PROBATE: The orderly, legal transfer of ownership of assets from a person who has passed away to the heirs and devisees. The probate process is necessary to ensure clarity and certainty as to the transfer of ownership. 2. DEFINITIONS OF UNFAMILIAR TERMS: Heir: a person who would be entitled to inherit under the laws of intestacy, which control when a person dies without a will. Devisee: a person (or entity) named in a will as a recipient of a gift under the terms of a will. Personal Representative: the person appointed by the probate court to transact business on behalf of the estate. Commonly referred to as simply "the PR." Letters Testamentary: a document issued by the probate court which is used to prove the appointment and authority of the personal representative for an estate in which the decadent died leaving a valid will. Letters of Administration: a document issued by the probate court which is used to prove the appointment and authority of the personal representative for an estate in which the decedent died without leaving a valid will. EIN: issued by the federal government; the number a PR uses to open a bank account or file tax returns instead of the Social Security number. Every estate is assigned its own EIN. The attorney for the PR will obtain it and give it to the PR. Guardian Partners 2015 / FID 101 Personal Representatives Handout, Page 1

2 Bond: an insurance policy which insures the estate assets in the event that a PR misappropriates estate assets. A bond is generally required by statute unless there is a will which waives the requirement. 3. DUTIES OF A PR: A. Ethical. The PR has an ethical duty to both beneficiaries and creditors; cannot favor one beneficiary over another, nor favor one creditor over another. B. Protect assets. The PR is responsible for the preservation of the assets of the estate. C. Marshal the estate assets. The PR is responsible for gathering all the assets as soon as the PR becomes aware of the asset. D. Prepare a List of estate assets. The attorney must file an "Inventory" of the estate assets within 60 days of the appointment of the PR. The PR must get the information to the attorney so the attorney can prepare and file the legal document. Include real property, personal property, contents of a safe deposit box, etc. NOTE: The statute requires that the Inventory list the value of the asset as of the date of death of the decedent. (Especially important for bank accounts.) E. Open an estate checking account for paying the estate expenses. THE PERSONAL REPRESENTATIVE MUST MAKE SURE TO HAVE A PHOTOCOPY OF EVERY CHECK WRITTEN ON THE ACCOUNT. Always write the reason for the check in the memo line. F. Steps to take in order to preserve assets. The PR will generally change the locks on real property, take pictures of the inside and outside of the house or real property; Guardian Partners 2015 / FID 101 Personal Representatives Handout, Page 2

3 4. CREDITOR CLAIMS: The PR must make a diligent search for creditors. A. See handout regarding Creditor's Checklist. The creditor's checklist is a guide; some will not apply. B. Important for the PR to do a change of address with the Post Office to make sure the PR is getting the decedent's bills. C. Creditors must be notified that the estate has been opened. The PR must provide the list of creditors to the attorney so the attorney can send out the legal notices. The PR must be sure to notify the attorney if the claim is questionable so the attorney can file a legal challenge to the claim. D. Creditors generally have 120 days in which to file a claim against then estate, starting from the first date the notice was published in the newspaper (this is something the attorney's office will take care of). 5. TAXES: The PR has the duty to make sure that all necessary tax returns are filed. Three potential tax returns: A. Form 1040: PR is responsible for filing the final income tax return for the decedent. B. Form 1041: If the estate assets generate income of more than $600 (interest on an investment account, for example), the estate must file a tax return. C. Estate tax: Most estates are not "taxable" estates, but there may be estate taxes due to the State of Oregon (for estates valued in excess of one million dollars) or the Federal government for estates exceeding five million dollars. D. The important thing is for the PR to keep careful, accurate records and find a good CPA to do the taxes for the PR. Tax laws are complicated and change often. The PR should not attempt to file the returns unless the PR has some specialized knowledge in this area. Guardian Partners 2015 / FID 101 Personal Representatives Handout, Page 3

4 6. DISTRIBUTION OF ESTATE ASSETS: Once all parties entitled to notice have been served notice, the creditors have all been given time to file claims, tax returns have been filed, creditors have been paid (assuming a solvent estate), it will be time for the attorney to prepare the petition for distribution and final accounting for the estate. This is the request for court authority to make distributions. The attorney prepares the paperwork with the PR's assistance. A. The PR needs to make sure the attorney has ALL the bank records, including every bank statement and a copy of every check written on the estate account. B. Once the accounting is drafted, the attorney will provide it for the PR's review and signature. The PR should read the document and all attachments carefully before signing. C. After the petition/final accounting is signed and filed, a copy will be sent to all beneficiaries. Each beneficiary has 20 days in which to review the documents and file an objection if the beneficiary feels there is a problem with the accounting. If an objection is filed, a hearing may be set for the court to settle the matter. If no objection is filed, the attorney will file a General Judgment which will approve the accounting and the distribution. D. When the PR receives a copy of the judgment authorizing distribution, the PR may then begin distributing the estate assets. The PR should discuss this with the attorney first, however, because the attorney will want the beneficiaries to sign receipts. E. The attorney will file a Supplemental Judgment Closing the Estate once the attorney has received all of the receipts and the estate is ready to be closed. 7. MISCELLANEOUS: A. Keep the beneficiaries informed. B. Work with the attorney or the attorney's staff. Don't try to save money by guessing. When in doubt, call! C. The PR needs to remember that it is not the PR's money! Guardian Partners 2015 / FID 101 Personal Representatives Handout, Page 4

5 Creditor Search Checklist As personal representative, you have a legal obligation to take reasonable actions during the first three months of administering this estate to identify everyone to whom the decedent owes a debt or other obligation, and everyone who claims to be owed such a debt, even if the claim is not valid. This checklist is intended to assure that you satisfy your legal obligation to identify claimants. Please initial each item if completed or N/A if inapplicable. You should return this completed checklist to the attorney for the estate three months after the initiation of the estate proceeding. Within that time period, you should discuss the requirements for giving notice to claimants. Notify the Postal Service (by change of address notice) to forward to you all of decedent's mail, including mail to residence and mail to any business address. Continuously review all mail for bills or other indication of debt for three months from the date of your appointment. Check with appropriate county tax assessor for outstanding property taxes due on real property owned by decedent. Check with insurance carriers for homeowner s insurance coverage and premiums that may be due. Check with national unclaimed property website: for any property listed in decedent s name. Check with state unclaimed property website for any property listed in decedent s name. Review all available decedent's bank account records for the last year to identify regular installment payments and partial payments on indebtedness. Follow up with inquiries on all payments that suggest a continuing obligation. Review all available records in the possession of the decedent. Follow up with inquiries as appropriate. Ask each attorney, accountant, or other financial consultant of the decedent known to you to have provided services to the decedent to provide you with information on any creditors of the decedent known to them. Guardian Partners 2015 / Creditor Search Checklist, Page 5

6 Creditor Search Checklist, continued Review income tax returns for the last three years with an accountant or the estate attorney, who will obtain appropriate tax releases. If the decedent was ever divorced, review divorce records to identify any unpaid obligations for property division, debts, spousal or child support, or attorney fees. If you find any record or information that the decedent was involved in any litigation during the last 20 years, have the estate attorney review the court judgment docket to verify that there is no outstanding judgment. Check with hospitals, ambulance companies, and physicians known to have provided recent care to the decedent to determine if there are balances owed that have not been paid by Medicare or medical insurance. If the decedent has received any form of public assistance, including Medicaid payment of nursing home expenses, determine whether any reimbursement is owed to the public welfare agency providing the assistance. If the decedent was involved in an accident during the two years ending on the date of death, review the circumstances to determine if there are outstanding claims for personal injury or property damage allegedly caused by the decedent. If the decedent operated a business, review business records and discuss potential claims with all business partners and associates. If the business was incorporated, check the corporate minute book and check for guarantees of corporate debts. Consider purchasing tail coverage on existing liability policies. If the decedent owned real property, including a home, check with the tax assessor to determine that property taxes are paid current. If the decedent rented an apartment or home or business property, verify that no further rent is owed. If you have any claim against the estate on account of a debt, notify the estate attorney to file a personal representative s claim. Consider whether there are any other obligations of the decedent not covered by this checklist of which you are aware. Guardian Partners 2015 / Creditor Search Checklist, Page 6

7 Probate Timeline Petition to open probate, appoint a Personal Representative (PR) [Attorney] Limited Judgment appointing PR; Letters Testamentary or Letters of Administration issued [Attorney] Notice to Interested Parties [Attorney] Marshal the probate assets [PR] Prepare a list of probate assets and their respective values as of the date of death; provide to attorney [PR] Prepare Inventory; file with court [Attorney] NOTE: Inventory must be filed within 60 days of the appointment of the PR Review mail and important papers, notify attorney of creditors [PR] Notice to Creditors [Attorney] Publications of Notice to Creditors [Attorney] NOTE: Creditors have 120 days from the date of notice in which to file a claim. Disallowance of Claims (if PR does not believe the claim is valid) [Attorney] NOTE: Any Claim not disallowed within 60 days of receipt is considered allowed. Affidavit of Diligent Search for Creditors, to be filed within 60 days of the expiration of the 120 day notice period [Attorney] Liquidate estate assets (sell the real property, the vehicles and other personal property, unless the will directs something different [PR] After period for Creditor Claims, pay debts of estate [PR] NOTE: if estate is insolvent do not pay debts without direction from attorney. The statute has a list of priorities for creditors which must be followed. Do NOT pay some creditors and not others. Prepare estate tax returns (or have CPA do it) [PR] Turn over all bank statements for the estate, along with photocopies of every check written (front and back), along with seller's closing statement for real property if there is one, to attorney for preparation of final account [PR] Prepare final account and petition for distribution of estate, along with notice to each beneficiary of that beneficiary's right to object within 20 days [Attorney] Prepare and submit General Judgment Approving Final Account and Distribution of Assets [Attorney] Prepare receipts for each beneficiary to sign acknowledging receipt of his/her share of the estate [Attorney] Once the judgment has been signed, distribute the estate assets, being sure to get the receipt signed [PR] Assemble all receipts and return them to the attorney [PR] Prepare and submit Supplemental Judgment Closing Estate [Attorney] Guardian Partners 2015 / Probate Timeline, Page 7