Few people feel prepared when a deceased person’s Will names them Personal Representative. They are often worried about knowing how to probate an estate, what to do, and when. They may also worry about making mistakes. There is good reason for that. Here are 7 common mistakes personal representatives make.
These are typical worries that are understandable. Legal processes are daunting to most people to begin with. And figuring out how to probate an estate while grieving a loss is even more so. Also, Personal Representatives can owe money if they make a mistake. The possibility of having to pay for the cost of a mistake can make it even more stressful.
Over the years, we have seen people make avoidable mistakes when probating an estate. These mistakes cost them time and money.
MISTAKE #1: PROCRASTINATING WHEN PROBATING AN ESTATE
Making legal decisions while adjusting to the loss of a loved one can be overwhelming. But the single biggest mistake you can make when probating an estate is waiting. This mistake can cost you. For example, let’s say someone complains that your procrastination costs the estate. The court could order you to pay money in the form of a surcharge.
MISTAKE #2: TAKING TOO LONG TO HIRE A LAWYER TO HELP WITH THE PROBATE PROCESS
As a Personal Representative in Arizona, you are not required to hire a probate attorney. Still, in our experience, most people do. If a will names you as Personal Representative, you should decide whether to hire an attorney. And do that soon. Having an attorney from the beginning will help you avoid costly mistakes. It will also help you avoid wasting time in the probate process.
Don’t wait until you are struggling in the later stages of an estate administration. If you do, they will likely spend more time and effort correcting mistakes. You can avoid mistakes by getting an attorney involved from the beginning.
MISTAKE #3: HIRING THE WRONG LAWYER TO PROBATE AN ESTATE
Many attorneys will take on Personal Representatives of a will as clients. Unfortunately, too many do so without the experience they need to help you. It is better to hire an attorney with estate administration experience.
An experienced probate lawyer with decades of experience can help you avoid frustration. But, a lawyer who has only handled a few estates will be less able to guide you through the process.
This may surprise you. You figure that you hired a lawyer, and the lawyer would tell you if you need someone else. But that’s often not the case. So, one of the top 7 common mistakes personal representatives make is simply hiring the wrong kind of lawyer.
Here is how you can hopefully avoid this mistake. We recommend interviewing a few different probate lawyers and asking questions like:
- How many estates have you handled?
- What are the steps we need to take for the probate process?
- How do you charge?
- Do you have experienced legal assistants to do some work to keep costs lower?
- Will you prepare any final tax returns for the deceased and the estate?
- About how long will it take you to finish the probate process?
- How much do you think it will cost?
You also need to work well together with your probate lawyer. While interviewing lawyers, pay attention to how they communicate with you. Are they listening to your concerns? Are they explaining the process in a way that’s easy for you to understand? And are they respectful of the level of involvement you want to have in the process?
Choosing the right probate lawyer to work with is critical if you want to avoid wasting time and money.
MISTAKE #4: FAILING TO UNDERSTAND FIDUCIARY RESPONSIBILITIES DURING PROBATE
In simple terms, a fiduciary is a person obligated to act in good faith and trust for the benefit of the estate. The law requires them to work in the estate’s best interests. As a fiduciary, the law holds you to a very high standard as you go about your estate administration duties. The court could force you to pay money if you mishandle an asset and it costs the estate money. You can also be responsible if you miss a discount deadline. The same if you improperly distribute assets to beneficiaries.
If a Personal Representative breaches a fiduciary duty, the court can surcharge them. That means having to pay money to the person hurt by the breach of fiduciary duty.
MISTAKE #5: PAYING CLAIMS AGAINST AN ESTATE IMPROPERLY
Your fiduciary responsibility includes administering the estate as the law requires. We see a common mistake in failing to understand something called “statutory priorities.” Arizona law establishes a schedule of priorities for paying claims against an estate. It outlines who gets paid and in what order. One of the most common mistakes we see is paying people “out of turn” during the probate process.
For example, a Personal Representative might pay Uncle Bob the $1,000 left to him in the will before paying the funeral bill. Or they pay Uncle Bob before a creditor. Or before someone else in the estate claimed commission. According to Arizona’s statutory priorities, it is improper for the Personal Representative to pay Uncle Bob before any of the other claims that have a higher priority. As a fiduciary obligation, making this kind of mistake could make you personally responsible for paying a surcharge to the person or creditor with the claim that you should have paid first.
MISTAKE #6: NOT IDENTIFYING AND SECURING ASSETS QUICKLY DURING THE PROBATE PROCESS
If you are the Personal Representative, one of your responsibilities is to identify and secure all assets. If you don’t do this fast enough, it can result in a financial loss to an estate. Again, the court may hold you personally financially responsible when those financial losses happen. The reason is that you failed to fulfill a fiduciary responsibility to the estate.
Do you know what is an asset in an estate? Do you know how to secure all an estate’s assets in a way that satisfies your fiduciary obligation? Are you aware that even if the will specifically “gives” an item to someone, you still need to secure that item as an asset that remains part of the estate and distribute it according to statutory priorities?
If you can’t answer these questions, hire an experienced probate lawyer. This will reduce your personal financial risk.
MISTAKE #7: MISMANAGING REAL ESTATE WHEN PROBATING AN ESTATE
The last of the 7 common mistakes personal representatives make is mismanaging real estate. The biggest asset that most Personal Representatives deal with is real estate. All too often, we see people fail to secure the real estate. They assume that they do not have to do much to “secure” this asset. After all, no one can “pick up” and move the real estate. Yet, the Personal Representative does need to secure real estate. And this means strictly controlling access to it. There needs to be insurance on the real estate as long as it remains property of the estate. It also needs to be maintained in the condition where it existed when the owner passed away. The Personal Representative needs to make sure the landscape plants don’t die. She needs to make sure homeless vagrants don’t break in and steal copper pipes or do other damage.
The Personal Representative also has a duty to sell the real estate for “fair market value. The real estate will need to appraised before a beneficiary can inherit the real estate. Again, as a fiduciary, you can be held financially responsible if any real estate is not appraised correctly and the estate suffers a financial loss.
Being named as Personal Representative can be confusing, scary and overwhelming. The probate process is complicated. And it is hard to know what your duties and responsibilities are.