Mom or dad has named you as personal representative of their estate or as trustee of their trust. As a personal representative or trustee, you are considered a fiduciary. This is someone who handles funds or property of another. As a fiduciary, you have a duty to follow the instructions in the will or trust and you have a duty to collect, protect and preserve estate or trust assets for the beneficiaries. These are called fiduciary duties.
If you are a named personal representative or trustee, you may not officially take over your duties for a month or more after the death. There may be probate proceedings to commence or appointments with the attorney to sign up as successor trustee.
You have no legal authority over estate property until the probate court appoints you as personal representative and issues letters of authority to you. You also have no authority as successor trustee of a trust until you sign an acceptance of the trusteeship. Who is in charge in the meantime?
Technically, no one is legally in charge. However, as a practical matter, you as named personal representative or trustee should take charge immediately. If you do not, the looting may begin sooner than you think.
If mom or dad has died, you should change the locks on the house immediately. And immediately means immediately. It does not mean waiting until tomorrow or next week. You do not know how many keys mom or dad has given out to the kids, in-laws or neighbors. Key-holders may be tempted to go into the house when the rest of the family is not there, such as during the funeral home visitation or even during the funeral.
It may be that mom or dad promised one of the kids the family coin collection so that child is just going in the house to retrieve something they believe is rightfully theirs. Or it just may be pure unadulterated greed.
I have seen cases in which one or more of the children went to the house even before mom or dad’s body was cold. Instead being with other family members and comforting them, these children rifled through the mom or dad’s belongings. Not surprisingly, some of mom or dad’s things come up missing. And the children who were at the house deny seeing, let alone taking, the missing stuff.
You may be tempted to let out-of-town family members stay at the house so they do not have to stay at a hotel when they come for the funeral. Don’t let them stay at the house. Let them stay at the hotel, even if it is someone that you think you can trust. Your job is to collect, protect and preserve the assets of the estate or trust. How can you do that when there is no security?
When the out-of-town family members leave, inevitably things have disappeared. Just like the case of the children rifling through home before the body is cold, the out-of town family members typically claim they did not take and never saw the missing stuff.
During the visitation or funeral while the rest of the family is grieving at the funeral home or church is an opportune time for someone to go through the house undetected. I have seen cases where one or more children leave the funeral home and go to the house and take stuff. Even when the children have been “caught” and return the taken items, some things still are missing. The children always seem to claim that they returned everything that they took. Surprise, surprise.
Once you are appointed personal representative of the estate by the court or accept the successor trusteeship, you now have legal authority to collect, protect and preserve the estate or trust assets. Then the beneficiaries may start calling, “When am I going to get my inheritance?” And these calls may not be limited to family beneficiaries. Charitable beneficiaries are not immune from making these calls. For example, there are some charities which are known for hounding personal representatives, trustees and attorneys until the bequest is received.
Communication to the beneficiaries is the best way to keep these calls to a minimum. Let the beneficiaries know what’s going on. I generally recommend that the personal representative or trustee send the beneficiaries a letter explaining what to expect and when. I oftentimes also recommend that there be no distributions during the four month creditor claims period. If that is the case, include it in the letter along with when to expect a listing of estate or trust assets and accountings.
If the calls from the beneficiaries continue and are bothersome, you can do something. You could let the beneficiaries know that the personal representative, trustee and attorney bill on an hourly basis, they keep track of their time and that the billings for the time spent talking to the beneficiaries will be charged against their share of the estate or trust. This usually cuts down on the excess calls.
Also, do not make early or partial distributions just because the beneficiaries really need the money unless and until you are sure the estate or trust will not need the money. For example, I handled an estate in which the four kids were equal beneficiaries. About three-quarters of the estate consisted of stocks, bonds and other investments. The remaining quarter of the estate consisted of the family cottage which was not going to be sold and was to stay in the family.
Because the beneficiaries needed the cash, the personal representatives made partial distributions of most of the investments to the children in equal shares. When it came time to distribute the family cottage, only the son wanted it. He could not buy out his sisters’ shares because he did not have the money. He had already spent his inheritance.
Now the three sisters were stuck with the cottage which to them was a liability. They would now have to continue feeding it by paying their share of utilities, insurance, taxes, repairs and maintenance. Not a bad deal for the son. Had the personal representatives waited to make any distributions, they could have distributed the cottage to the son as his share of the estate and the investments to the daughters. In that instance, everyone would have received an equal share of the estate, but would not have been stuck with an obligation they did not want.
When there is real estate in the estate or trust that is going to be sold, you should keep sufficient funds to pay the real estate expenses until it is sold. You do not want to be in the position to have to ask the beneficiaries to return some of their inheritance because you did not withhold enough from the distributions.
When you are a personal representative or successor trustee, it is best to keep the beneficiaries informed and seek advice from a competent estate planning professional.
By Matthew M. Wallace, CPA, JD
Published edited September 03, 2017 in The Times Herald newspaper Port Huron, Michigan as: So you have been put in charge of the estate or trust