What is a Personal Representative and What are their Responsibilities in a Florida Probate?

What is a Personal Representative and What are their Responsibilities in a Florida Probate?

Importantly, in a Formal Administration a Personal Representative is nominated.  Often referred to as an “executor” in other states, Florida requires that a person be appointed as the Personal Representative to administer a Formal Administration probate proceeding.  Whether you are being nominated as the potential future Personal Representative in a Last Will and Testament or if you are about to open a Florida Probate proceeding, you should understand the role of a Personal Representative and the responsibilities required of you.

In Florida a Personal Representative must be represented by counsel.  The requirement of representation stems from the complexity of many probate proceedings required to fully administer a probate.  Nonetheless, even though in Florida a Personal Representative must be represented, there are a number of scenarios where liability for actions taken, even based on the advice of counsel, can lead to personal liability for the Personal Representative.  As such, it is of the utmost importance that all individuals assuming the role understand their basic duties in a Florida Probate.

Generally, the basic duties of the Personal Representative in a Florida Probate are to collect the assets of the decedent and to provide for payment of valid creditor claims and tax liabilities.  Finally, after the gathering of assets and payment of liabilities the Personal Representative is to make payment to beneficiaries or heirs pursuant to either the valid will and testament of the decedent or the intestate distribution scheme.

In order to have the power to carry out the process of wrapping up the affairs of the decedent, the proposed Personal Representative must apply for the position through filing a Petition for Administration, and an Oath of Personal Representative.  If approved by the Court, the Court in the Florida county where the probate proceeding is pending will issue two important documents.  The first is an Order appointing Personal Representative and the second is a document called Letters of Administration.  These Letters of Administration or “Letters” enable the nominated Personal Representative to deal with third parties such as banks, mortgage companies, mortgage servicers, insurers or creditors on behalf of the estate.  After appointment and receipt of Letters of Administration the Personal Representative is also enabled to open an estate account and obtain a Federal Tax Identification number from the IRS.     The estate account is used by the Personal Representative to make payments for the administration of the estate and to hold funds and liquidated assets gathered by the Personal Representative.

Florida law also empowers a Personal Representative to take certain actions without leave of Court, those actions are enumerated specifically in Fla. Stat. §733.612 which provides:

Except as otherwise provided by the will or court order, and subject to the priorities stated in s. 733.805, without court order, a personal representative, acting reasonably for the benefit of the interested persons, may properly:

(1) Retain assets owned by the decedent, pending distribution or liquidation, including those in which the personal representative is personally interested or that are otherwise improper for fiduciary investments.

(2) Perform or compromise, or, when proper, refuse to perform, the decedent’s contracts. In performing the decedent’s

enforceable contracts to convey or lease real property, among other possible courses of action, the personal representative may:

(a) Convey the real property for cash payment of all sums remaining due or for the purchaser’s note for the sum remaining due, secured by a mortgage on the property.

(b) Deliver a deed in escrow, with directions that the proceeds, when paid in accordance with the escrow agreement, be paid as provided in the escrow agreement.

(3) Receive assets from fiduciaries or other sources.

(4) Invest funds as provided in ss. 518.10-518.14, considering the amount to be invested, liquidity needs of the estate, and the time until distribution will be made.

(5) Acquire or dispose of an asset, excluding real property in this or another state, for cash or on credit and at public or private sale, and manage, develop, improve, exchange, partition, or change the character of an estate asset.

(6) Make ordinary or extraordinary repairs or alterations in buildings or other structures; demolish improvements; or erect new party walls or buildings.

(7) Enter into a lease, as lessor or lessee, for a term within, or extending beyond, the period of administration, with or without an option to renew.

(8) Enter into a lease or arrangement for exploration and removal of minerals or other natural resources or enter into a pooling or unitization agreement.

(9) Abandon property when it is valueless or so encumbered, or in a condition, that it is of no benefit to the estate.

(10) Vote, or refrain from voting, stocks or other securities in person or by general or limited proxy.

(11) Pay calls, assessments, and other sums chargeable or accruing against, or on account of, securities, unless barred by the provisions relating to claims.

(12) Hold property in the name of a nominee or in other form without disclosure of the interest of the estate, but the personal representative is liable for any act of the nominee in connection with the property so held.

(13) Insure the assets of the estate against damage or loss and insure against personal and fiduciary liability to third persons.

(14) Borrow money, with or without security, to be repaid from the estate assets or otherwise, other than real property, and advance money for the protection of the estate.

(15) Extend, renew, or in any manner modify any obligation owing to the estate. If the personal representative holds a mortgage, security interest, or other lien upon property of another person, he or she may accept a conveyance or transfer of encumbered assets from the owner in satisfaction of the indebtedness secured by its lien instead of foreclosure.

(16) Pay taxes, assessments, and other expenses incident to the administration of the estate.

(17) Sell or exercise stock subscription or conversion rights or consent, directly or through a committee or other agent, to the reorganization, consolidation, merger, dissolution, or liquidation of a corporation or other business enterprise.

(18) Allocate items of income or expense to either estate income or principal, as permitted or provided by law.

(19) Employ persons, including, but not limited to, attorneys, accountants, auditors, appraisers, investment advisers, and others, even if they are one and the same as the personal representative or are associated with the personal representative, to advise or assist the personal representative in the performance of administrative duties; act upon the recommendations of those employed persons without independent investigation; and, instead of acting personally, employ one or more agents to perform any act of administration, whether or not discretionary. Any fees and compensation paid to a person who is the same as, associated with, or employed by, the personal representative shall be taken into consideration in determining the personal representative’s compensation.

(20) Prosecute or defend claims or proceedings in any jurisdiction for the protection of the estate and of the personal

representative.

(21) Sell, mortgage, or lease any personal property of the estate or any interest in it for cash, credit, or for part cash or part credit, and with or without security for the unpaid balance.

(22) Continue any unincorporated business or venture in which the decedent was engaged at the time of death:

(a) In the same business form for a period of not more than 4 months from the date of appointment, if continuation is a reasonable means of preserving the value of the business, including good will.

(b) In the same business form for any additional period of time that may be approved by court order.

(23) Provide for exoneration of the personal representative from personal liability in any contract entered into on behalf of the estate.

(24) Satisfy and settle claims and distribute the estate as provided in this code.

(25) Enter into agreements with the proper officer or department head, commissioner, or agent of any department of the government of the United States, waiving the statute of limitations concerning the assessment and collection of any federal tax or any deficiency in a federal tax.

(26) Make partial distribution to the beneficiaries of any part of the estate not necessary to satisfy claims, expenses of

administration, taxes, family allowance, exempt property, and an elective share, in accordance with the decedent’s will or as authorized by operation of law.

(27) Execute any instruments necessary in the exercise of the personal representative’s powers.

Once appointed the Personal Representative will also want to as soon as possible make provision for the payment of creditor claims.  There are generally two types of creditors, the known and the unknown.  Known creditors must be given notice of the proceeding while unknown creditors are dealt with by providing publication of a Notice to Creditors document in a newspaper of local circulation for the statutorily required period.  Finally, the Personal Representative needs to ensure that provision for any tax liabilities of the decedent has been made.  Tax issues should be handled by a CPA but generally the Personal Representative must make provision for tax liability to satisfy taxes owed on any earned income or investment income earned by the decedent.  Additionally, there may be estate taxes due depending on the size and nature of the estate assets.

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