What do I do if I’ve been named “executor” in a will?
What should you do after being named executor in a will? The first answer to this question should be another question: “do I want to serve as executor?” No one is required to accept this responsibility. Should you wish to decline, you can sign a document called a “renunciation.” This would enable either an alternate executor named in the will to serve, or to allow another authorized party to petition to become the administrator of the estate.
What is an executor and what are his or her duties? First, the term “executor” typically refers to a male; “executrix” is the female form. The more modern term is “personal representative,” which generically refers to an executrix, executor, administrator or administratrix. The term executor simply refers to a person appointed in a will; for persons who die without a will, the term “administrator” is used.
The duties of a personal representative are essentially to gather the assets of the deceased, convert them to cash if appropriate, and pay the decedent’s debts and inheritance taxes. Finally, the personal representative will distribute the balance to the beneficiaries named in the will, or if no will, to the decedent’s heirs as set forth by law.
While it is not necessary to have a lawyer assist the personal representative in administering an estate, it is certainly advisable. There are many ways that an attorney’s advice can save the estate money, and protect the personal representative from the many pitfalls in administering an estate.
As a few examples of the type of issues facing a personal representative, the first is providing notice to the beneficiaries. The law requires certain persons to receive notice of the administration of an estate, and a lawyer can determine who needs to receive notice. Failure to provide notice could potentially expose the personal representative to liability in the future.
Next, a decision needs to be made as to whether or not to advertise the estate. While not strictly required by law, advertising is beneficial because the purpose of the advertising is to cut off claims of creditors. However, in some situations, typically where there is a sole beneficiary who perhaps had a power of attorney for a parent and is very familiar with their affairs, the cost of the advertising can be saved.
It is the personal representative’s responsibility to file and pay any inheritance taxes due. There are many issues dealing with inheritance tax that most people are not able to handle on their own. Just as an example, in Pennsylvania, there is a 5% discount to the extent that inheritance taxes are paid within three months of death. This may not be possible if there are not sufficient liquid assets, but an attorney can assist in estimating the tax, which can result in significant savings to the beneficiaries.
There are many other issues facing a personal representative. One of these issues is whether or not to take a fee. The personal representative is entitled to be paid from the estate for their services. However, this is not always advisable because the personal representative will need to pay income taxes on their fee, which could be greater than the savings in inheritance taxes to the estate.
Other issues confronting a personal representative are whether or not to make an “at risk” distribution. This is any distribution made before one year has passed from the advertisement of the estate. Such a distribution is “at risk” because if claims of creditors later arrive, the personal representative may have personal liability for these claims.
One of the more difficult issues to deal with is that of an insolvent estate. This is where the debts are greater than the assets. It is still necessary to file an inheritance tax return even though no tax will be due. It is also important that no debts be paid until all debts are known. This is because, by law, certain classes of debts have greater priority than others in being paid. It is the personal representative’s responsibility, with advice from their attorney, to only pay those creditors that are entitled to payment.
At Bernard Stuczynski & Barnett, we would be pleased to discuss your situation. In most cases, it will benefit a personal representative to have representation by a skilled attorney.
Excellent legal representation requires a diverse skill set.
Why does a personal injury firm also handle estate work? The simple answer is that proper representation of the family of someone who is wrongfully killed requires a thorough understanding of estate law. The first step in administering an estate is the formal appointment by the court of a “personal representative.” That is simply the more modern and generic term for someone appointed by the court to act on behalf of the decedent (the deceased individual). If a person dies with a Will, that person will have appointed an Executor (male) or Executrix (female) in their Will. If a person dies without a Will, an administrator is appointed. They are all considered “personal representatives.”
From a personal injury lawyer’s point of view, the most important types of actions involving a deceased person are “wrongful death” and “survival” actions. A survival action is simply a claim which a deceased person “owned” at their death. This is not limited to injury claims; it could be a simple claim for money owed. It is still called a survival action because the claim lives beyond—or survives—the death.
Over the years, we have, sadly, encountered a number of situations in which a client in a personal injury case has died from causes unrelated to their injury. Despite our client’s passing, we are still able to pursue the claim. In order to do so, a personal representative must be appointed.
Matters become much more complicated with serious injuries resulting in death. In these situations, the decedent likely has both a survival and a wrongful death action. In simple terms, the survival action is for damages for conscious pain and suffering incurred prior to death as well as certain economic losses caused by the death. A wrongful death action is quite different in that it actually belongs to certain heirs who were dependent upon the deceased for support, or had a reasonable expectation of support in the future. If pursued in a timely fashion, the personal representative has the authority to pursue the wrongful death action as well as the survival action, but must do so for the benefit of the wrongful death beneficiaries.
One of the most important aspects of concluding a combination wrongful death and survival action is allocating the damages between them. Damages recovered in a survival action become a part of the estate and may be subject to inheritance taxes. It is therefore important to properly allocate damages in death cases so as to pay no more inheritance tax than is required by law.
Of course, most estates fortunately do not involve a wrongful death claim. We are able to represent clients who are the personal representative in these more typical estate cases. In a wrongful death situation, we will also work with a family attorney who is taking care of estate matters but who may be inexperienced or otherwise unable to pursue the death claim.
The law in this area can vary significantly from state to state. This discussion is limited to Pennsylvania law.
If you are named as the personal representative in the Will of the decedent, or you are the next of kin to a person who died without a Will, call our office to schedule a meeting with an attorney. We will be happy to discuss your situation whether there is a wrongful death claim or not.
Do I need a Power of Attorney?
A Power of Attorney is a legal document that authorizes someone else to act on your behalf. The person granting the authority is the “Principal” and the person (or persons) to whom the authority is granted is the “Agent” or “Attorney-in-Fact.” It is grammatically incorrect to say “I am Power of Attorney for John Doe.” The Power of Attorney is the document itself.
A Power of Attorney may be limited to a specific purpose such as enabling someone to sign a deed or a car title on your behalf. It may also be a very broad Power of Attorney allowing your Agent to literally take any action that you could do yourself, such as signing checks and making medical decisions. In Pennsylvania, however, there are a number of specific actions that can only be performed by the Agent if expressly set forth in the Power of Attorney. One example is the giving of gifts.
It is extremely important that you have the utmost trust and confidence in anyone that you appoint as your Agent. When you appoint an Agent, they are said to be in a “fiduciary” capacity. This means that they are in a position of trust and are required to act on your behalf. However, there still exists a great potential for abuse. The careful selection of your Attorney-in-Fact is of the highest importance. In Pennsylvania, a Power of Attorney is not valid unless the Agent signs an acknowledgment of their responsibilities. Commonly spouses will appoint each other as their agent, and perhaps a trusted adult child as an alternate.
One of the most important features that we usually include in a Power of Attorney is language that makes it a “Durable Power of Attorney.” The general rule in Pennsylvania is that the authority granted by a Power of Attorney expires upon the death or legal incompetence of the Principal. A Durable Power of Attorney is still valid even if the Principal becomes legally incompetent—that is, incapable of making their own decisions. While the authority granted by any Power of Attorney still ceases upon death of the Principal, the Durable Power of Attorney has the added benefit of enabling the Agent to act on behalf of a Principal that has become mentally disabled or incapacitated. This can avoid the often significant expense of asking the court to appoint a Guardian.
Do you need a Power of Attorney? In an ideal world, everyone should have one. We have always advised clients that, in general terms, the older you get the more important it becomes to have one. We have had instances where a person had a stroke, leaving them incompetent. With a Power of Attorney in place, no court guardianship was necessary. We have also seen instances where, without a Power of Attorney in place, an expensive Guardianship became necessary. Of course even a young person is at risk of a serious injury that can render them incapable of managing their affairs. A Power of Attorney is a relatively low-cost legal service that everyone should consider.
If you’re interested in learning more about a Power of Attorney and whether or not it could be beneficial to your circumstances, call our office to schedule a meeting with an attorney.