There are a whole host of duties and responsibilities imposed by the law upon the personal representative. It is therefore advisable to name one or more backups in case the first choice is unavailable or unwilling to act as a personal representative.
The appointment of a personal representative is not necessarily automatic. The person must be evaluated and appointed by the probate court. Upon approval, the personal representative will receive letters testamentary or letters of administration, which gives the personal representative the authority to act on behalf of the decedent.
To avoid personal liability and to protect the interests of the beneficiaries, it is prudent for a personal representative to obtain a fiduciary bond. Some states require personal representatives to obtain fiduciary bond, unless the will contains a provision that waives this requirement.
The personal representative is legally entitled to reasonable compensation. The rate of compensation is statutory based on the value of the estate, unless the will states otherwise. In addition, the personal representative is allowed reimbursement for any out of pocket expenses the personal representative pays for in advance on behalf of the estate.
The personal representative may waive his or her right to compensation and serve for free. This waiver is commonly made by personal representatives who also happen to be beneficiaries of the estate. Foregoing compensation is usually done for tax savings because the income earned by the personal representative is taxed as personal income. However, if no compensation is paid, the estate cannot take a deduction for this cost. The lack of deduction may not be relevant for the estate if it is not liable for estate taxes anyway.
To find out more about personal representation, contact the Law Offices of David A. Shapiro, P.C. at 310-773-0377.
Stay tuned for more on this topic on our subsequent blog.
*This blog entry was not written by an Attorney and should not be construed as professional legal advice.