Choices When Making an Estate Plan: Part Three
Written by Jim Worthington on March 3, 2019
This article continues a four-part series on the choices you must make to complete a comprehensive estate plan. For those, who want to read ahead, the website includes all of this information in a white paper.
Previous articles addressed planning for disability and the choice of guardian for minor children. This article covers the choice of the person to administer your estate. If you’re married, you will usually name your spouse as personal representative so you would likely be choosing an alternate to serve if your spouse can’t. Because of my experience, I’m able to provide some insights to help you pick these persons. The discussion below includes a summary of the nominated person’s responsibilities but for a three-part series about the details, here are links to Part 1, Part 2, and Part 3.
Who Will be the Personal Representative of Your Estate?
The personal representative (also called the executor or executrix) has the relatively straightforward job of gathering your assets. This may include selling your car, other personal belongings, and home. It may include collecting money that is owed to you. Under Kentucky law, the personal representative must provide the probate court with an inventory of your assets at their fair market value approximately two months after being appointed as personal representative.
After the court appoints the personal representative, creditors have six months to present claims to the personal representative for amounts that they say you owed them during your lifetime. During this six-month period, the personal representative must preserve the assets of the estate. After the six months, the personal representative must evaluate the creditors’ claims, pay the ones that deserve to be paid, and defend the ones that do not deserve to be paid.
The personal representative is also responsible for filing any tax returns that are required and paying any taxes that are due. These tax returns can include Federal estate, state inheritance and estate, individual income, and estate income tax returns. (Not all of these are required in every estate.)
After collecting the assets, paying creditors, and taking care of taxes, the personal representative can finally distribute the estate to the beneficiaries. The beneficiaries can include individuals, trusts, and charities.
The personal representative’s job takes anywhere from nine months in a straightforward estate to several years in a large estate that is aggressively audited by the Internal Revenue Service. When the personal representative is ready to close the estate, the personal representative must be able to provide a complete accounting of all of the assets received, all of the bills paid, and all of the distributions made to beneficiaries. The personal representative must be a very organized person.
Before ending this article, some general concepts will be useful for you to consider.
It is usually better to name a single person to fill each of the positions in an estate plan rather than to name two or more people to the same position. In other words, I do not recommend co-personal representatives. The personal representative’s hands-on tasks are not well-suited for a committee. Naming one person does not mean he or she can’t get input from others in your family.
In fact, many people find themselves naming the same person to many or all of the roles in their estate plan. This should not be a concern because one thing that families do for each other is to take care of each other during difficult times. Any concern about overloading someone can be reduced by attention to the next step.
It is best to ask a person about filling the role before naming him or her. Along the same lines, you should not be concerned that naming one person will hurt an omitted person’s feelings. If the omitted person is not up to the task, you would not be doing him, her, yourself, or anyone in your family a favor by giving that person a task beyond his or her abilities.
I hope this discussion helps start you thinking about the important decisions when making your estate plan. It is not meant as legal advice for your specific situation but as a starting point for a live conversation as part of your legal representation.