Congratulations! You have been appointed as the personal representative of a loved one who has passed on and are now charged with settling the final affairs. It is a privilege and an honor to be considered for this important role because of the immense trust that has been placed in you. This position, however, comes with significant legal obligations and responsibilities that must be carried out in a timely manner. Failure to adhere to these duties can lead to your removal as personal representative by the court and possibly personal liability for your actions.
The personal representative is a fiduciary and is obligated to observe a high standard of care in managing the estate’s assets on behalf of beneficiaries, creditors and the court. The duties of the personal representative include, but are not limited to, the following:
- Give Notice of Appointment – Pursuant to MCL 700.3705(1), “[n]ot later than 28 days after a personal representative’s appointment or other time specified by court rule, the personal representative, except a special personal representative, shall give notice of the appointment to the decedent’s heirs and devisees…”. This notice must include the name and address of the personal representative, whether the court is supervising the administration and whether the decedent’s will was admitted to probate or not. This duty can be completed by executing, filing and serving PC 573 (Notice of Appointment and Duties of Personal Representative). If there are no known heirs, then notice of the appointment must be given to the Michigan Attorney General.
- Carry Out The Terms of the Will – Pursuant to MCL 700.3703(1), “[a] personal representative is under a duty to settle and distribute the decedent’s estate in accordance with the terms of a probated and effective will and this act, and as expeditiously and efficiently as is consistent with the best interests of the estate.” To the extent that it is possible, the personal representative is charged with ensuring the decedent’s final wishes are carried out. A copy of the will must be provided to all interested persons.
- Notify Surviving Spouse of Right to Election and Allowances – Within 28 days of appointment, the personal representative shall notify the surviving spouse (if any) of the right to election to take a certain portion of the estate against the terms of the will. The surviving spouse may choose to abide by the terms of the will or take half of the share that he or she would have received if the decedent died without a will, reduced by half of value of all property derived from the decedent by other means. The surviving spouse may also have a right to the homestead allowance, family allowance and certain exempt property. The personal representative can accomplish this by executing, filing and serving PC 581 (Notice to Spouse of Rights of Election and Allowances).
- Notice to Friend of the Court – Within 28 days of appointment, the personal representative shall give notice to the friend of the court office in the county where the estate is being administered of the names and addresses of the decedent’s surviving spouse, devisees and heirs. The personal representative can accomplish this by executing, filing and serving PC 618 (Personal Representative Notice To The Friend of The Court)
- Identify, Marshall and Protect Assets – A personal representative has the right to take possession or control of the decedent’s property. Pursuant to MCL 700.3709, “[t]he personal representative shall pay taxes on, and take all steps reasonably necessary for the management, protection, and preservation of, the estate in the personal representative’s possession.” Also, per MCL 700.3711, “…a personal representative has the same power over estate property that an absolute owner would have, in trust, however, for the benefit of creditors and others interested in the estate.” This means that the personal representative has broad discretion to deposit or invest liquid assets of the estate, sell property, make ordinary or extraordinary repairs to real estate, enter into a lease agreement or vote as a shareholder (provided that it is beneficial for the estate). The personal representative may also file necessary legal action to recover possession of, or determine the title to, property.
- Provide Notice to Creditors – Pursuant to MCL 700.3801, a personal representative shall publish a notice notifying estate creditors to present their claims within 4 months after the date of the notice’s publication or be forever barred. If creditors are already known to the personal representative, then notice should be given within 28 days of the personal representative first learning of the creditor. The personal representative may deliver or mail a notice of disallowance within 63 days of the claim’s presentment, or else the claim will be allowed.
- Prepare Inventory of Assets – Pursuant to MCL 700.3706(1), “[w]ithin 91 days after appointment or other time specified by court rule, a personal representative, who is not a special personal representative or a successor to another representative who has previously discharged this duty, shall prepare an inventory of property owned by the decedent at the time of death, listing it with reasonable detail, and indicating as to each listed item, its fair market value as of the date of the decedent’s death, and the type and amount of an encumbrance that may exist with reference to each listed item.” A copy of the inventory must be sent to all presumptive distributes and other interest persons requesting it. Although the original inventory does not have to be filed with the court, the personal representative must submit enough information for the probate court to calculate an inventory fee. The personal representative can complete this duty by filling out PC 577 (Inventory).
- Prepare and File Accountings – In a supervised administration, the personal representative is required to file a complete itemized accounting of the administration once per year. The probate court may require accountings more frequently and a final accounting will also be required when the estate is ready for closing. These accounts must show in detail all income and disbursements and a list of the remaining property. The accountings must be filed within 56 days of the end of the accounting period and served upon the required persons.
- Prepare and File Tax Returns – The responsibility of the decedent’s final income tax return (both state and federal) belongs to the personal representative and is due on the April 15th following the year of death. The personal representative may also be responsible for filing estate income tax returns (Form 1041) or Michigan fiduciary tax returns (MI-1041) if the estate had more than $600 of income during the year. The personal representative may also have to file the federal estate tax return (Form 706) or a gift tax return (Form 709) under certain conditions. Finally, the personal representative must provide proof to the court that the estate is not subject to the Michigan inheritance tax.
- Keep Beneficiaries Informed – Pursuant to MCL 700.3703(4), “[u]ntil a beneficiary’s share is fully distributed, the personal representative shall annually, and upon completion of the estate settlement, account to each beneficiary by supplying a statement of the activities of the estate and of the personal representative, specifying all receipts and disbursements and identifying property belonging to the estate.” If the estate’s affairs are not settled within one year of the personal representative’s appointment, then the personal representative must file PC 587 (Notice of Continued Administration) with the probate court and serve it on all interested persons stating the reasons why the estate remains under administration.
- Make Payments and Distributions – The personal representative is responsible for paying the Inventory Fee to the probate court and paying the taxes of the decedent and the estate. The personal representative is also responsible for paying the bills of the estate, satisfying creditor claims and distribute the remaining assets as required by law. In a supervised administration, distributions cannot be made without prior court order.
- Closing The Estate – If the estate is unsupervised, it can be closed by filing a Sworn Statement (PC 591) or a Petition for Complete Estate Settlement (PC 593), regardless if it was opened informally by application or formally by petition. A supervised estate may only be closed by filing a Petition for Complete Estate Settlement (PC 593). The estate cannot be closed unless the estate has been open at least five months, the inventory fee is paid, all estate or inheritance taxes are paid and the notice to creditors 4-month deadline has expired. The personal representative will not be discharged from responsibility until the final distributions are made and the estate is closed.
The duties may seem daunting to the novice but the personal representative has the right to employ accountants, attorneys, investment advisors, appraisers or any other agent to assist them in the performance of his or her duties at the expense of the estate. The personal representative is also entitled to reasonable compensation from the estate for carrying out these responsibilities. If you are a personal representative and have questions on how to proceed, the attorneys at Kershaw, Vititoe & Jedinak PLC are available to assist, guide and represent you no matter how small or how complicated the administration may be.