Information for Personal Representatives
As a personal representative, the law imposes on you a “fiduciary duty”, which means that you must demonstrate the highest degree of honesty, diligence and good faith, and must act impartially, toward the beneficiaries and creditors of the estate. You must keep accurate and up to date records of all financial transactions involving the estate. You may not sell any estate assets to yourself, to any of your business associates, or to any of your immediate family members unless all the residuary beneficiaries of the estate consent to the sale in writing or unless you obtain approval of the sale from the Chancery Court.
As a personal representative, you have a duty to keep the beneficiaries of the estate informed as to the status of the estate.
ESTATE CHECKING ACCOUNT
Once the estate tax identification number has been obtained, an estate checking account should be opened to receive all estate deposits and pay all estate bills (unless the estate is insolvent). A detailed record of all estate transactions should be maintained. No checks should be written on the estate account unless they are for the proper debts of the Decedent, for taxes owed by the Decedent or the estate, or for funeral or administration expenses.
We do not recommend using a debit card or credit card. We prefer paper checks with a banking institution that provides an image of both sides of the check. If there is any question whether there will be adequate funds to pay everything, please discuss this issue with your attorney before paying any debts or expenses, because as personal representative you can be found personally liable if you prematurely paid or distributed estate assets and it turns out that there are not sufficient funds remaining to pay debts, taxes or expenses.
You must not mix estate assets with your personal assets. To avoid complications, title each asset belonging to the estate that comes into your possession in the name of the estate as follows:
Your Name, Personal Representative
DISTRIBUTIONS IN THE WILL
A personal representative certainly has the discretion to make distributions in an estate prior to closing. However, any such distributions should be made keeping in mind any anticipated claims of creditors, claims of a spouse (if applicable), or expenses of administration. Making distributions prior to the close of the 4-month claims period is always risky. We must follow the mandatory distributions as listed above prior to making distributions to beneficiaries.
You can, of course, reimburse yourself or others if any funeral or similar expenses were advanced prior to the opening of the estate account. If the Will waived compensating you for services, you will not be paid for your time as a personal representative.
All “probate assets” (“probate assets” are assets owned solely in the decedent’s name, that is, not jointly owned assets and not assets that are payable to a designated person as the beneficiary) should be located, gathered, and brought under your control and possession. If practical, estate assets should be re-titled in the name of the estate and under the estate’s tax identification number. Consult previous tax returns to help identify assets.
Real Estate: All the real estate must be located in addition to the decedent’s home (real estate in other states, vacation home, etc.). Search for property deeds, mortgage statements, and insurance policies. Secure the property. It may be necessary to change the locks. Store valuable property such as expensive jewelry and art.
The attorney will evaluate the Will to determine if the Personal Representative has the authority to sell the property. If not, all the beneficiaries must sign the deed. If the decedent died intestate (without a Will), all the legal heirs must sign the deed.
Personal Property – Cars, Boats, Motorcycles, and Other Vehicles: Locate the registration and insurance documents to determine if the decedent owned the vehicles in whole or in part. The surviving spouse, if applicable, must have the vehicle re-registered in his/her name.
Small Business: If the decedent owned a business, we will need to value the business as of the date of death. A decision must be made whether to continue the business or to sell it.
Mail: Read through the decedent’s mail and look for bank statements and brokerage statements.
Digital Assets: If the decedent owned a computer or other electronic device including a smartphone, determine if there is a password list with the decedent’s valuable papers. Make a complete backup of the hard drive. You may use an external hard drive or flash drive. There may be very important financial information stored on the device. Additionally, there may be photos important to the family members.
VALUE OF ESTATE
A list of all the Decedent’s assets (including account or policy numbers) and showing the fair market values of these assets as of the Decedent’s date of death needs to be created. This would include any bank accounts, certificates of deposit, real estate, stocks, bonds, mutual funds, and other securities, pensions, annuities and other retirement assets, life insurance, automobiles, and other property of any nature whether owned solely in the Decedent’s name, jointly with another person, or payable to a designated beneficiary. Some assets may need to be formally appraised, but please discuss this with me before incurring that expense.
Any life insurance payable on the Decedent’s life will need to be applied for by the beneficiary of each such policy. If you need help in filing claims on any life insurance policies, please let us know. With respect to each life insurance policy, the beneficiary should request a Form 712 from the insurance company. A Form 712 is an official form from the insurance company showing the exact amount of the death benefit or other insurance proceeds.
TN INHERITANCE TAX
Tennessee inheritance tax does not apply to individuals who died after December 31, 2015.
You will take your Oath that you will properly perform your duties as the personal representative of this estate to the best of your ability and the Clerk’s Office will issue you Letters Testamentary (Will) or Letters of Administration (no Will). You will need these letters to open the estate bank account and in handling your duties as the personal representative of the estate. Without these letters, you have no legal authority.