Estate administration comes with many responsibilities. The personal representative could easily spend a year or even longer carrying out their responsibilities and fulfilling the last wishes of the deceased individual.
Some of those responsibilities are more important than others. Mistakes can lead to personal liability for the representative and attempts to remove them from their position. Other people with an interest in the estate can take legal action to remove a personal representative or hold them accountable for certain estate losses.
There are many responsibilities that a personal representative must fulfill during estate administration. The three obligations below are among the most important.
Identify and secure assets
The personal representative of an estate has to determine what resources the decedent possessed before their death. They have to create an inventory of property and reconcile that with the instructions provided by the decedents regarding their assets. In some cases, they may need to liquidate resources to cover financial obligations and distribute proceeds among beneficiaries. Other times, they need to take physical control of assets to hand them out to beneficiaries.
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Personal representatives generally have to settle all outstanding financial obligations before they begin distributing assets to beneficiaries. Especially if the estate is at risk of being insolvent, meaning that debts may consume all remaining estate resources, personal representatives need to ensure that they provide appropriate notice to creditors and pay debts in the right order of priority.
Address tax obligations
There are several kinds of taxes that a personal representative may need to address. They likely need to file a final income tax return on behalf of the deceased individual. They may also need to file an income tax return on behalf of the estate if they sell assets and generate $600 or more in revenue. Finally, they may also need to address estate taxes. There is a New York state estate tax that applies to estates worth $7.16 million or more. Federal estate taxes apply to estates worth $13.99 million or more.
Properly addressing the responsibilities of estate administration can protect representatives from removal and from personal financial liability for taxes or debts. Personal representatives often need guidance to ensure that they handle all critical matters in a timely and appropriate manner, and that’s okay.
