Tips for Personal Representatives

Before we share some helpful tips, a few definitions:

• “Executor” is the person named or nominated in a Last Will to administer the estate.
• “Administrator” is the person appointed by a court to administer the estate (typically where there is no Last Will – “intestate”)
• “Personal representative” is a phrase that means someone who is charges with administering an estate, so it includes either of the above two words.

The above will be used interchangeably in this guide.

Locate Important Papers

• An executor needs to determine if a will exists and if so locate the original. This can requires a thorough search of the deceased’s home, belongings and sometimes a safe deposit box. You need the original – or you will need ask a court to allow you to probate a copy if that is all you can find. If you know that the deceased had an attorney, contact that attorney to see if they have any knowledge of the existence of a will or its location. Sometimes people will keep copies of their wills in their homes, but leave an original with their attorney for safe-keeping. Virginia, unlike some states, does not allow persons to lodge their Will with the Court while they are alive.
• Take note of and keep organized all financial and tax documents you comes across during your search. This will make your work easier later on.
• You will likely will need to produce death certificates to close the deceased’s various accounts. The funeral home is the best place to get death certificates, but you can also order them from the Division of Vital Records. Get plenty of death certificates.

“Probate” any Last Will (But don’t qualify before you know that you need to!)

• A common mistake we see is personal representatives go to the courthouse and qualify as executor or administrator when they really did not need to. Sometimes is best to simply record (some people say “probate”) the Will, but not qualify as executor or administrator.
• There are many factors to consider in determining whether to qualify. Situations where you might not need or want to qualify can include:
  • The deceased had very little personal property in her name (even if she had real estate).
  • The deceased had debts well in excess of the value of his assets (the estate is insolvent).
• Recording or probating the Will without qualifying is simple and typically involves little expense and less than an hour visit in the Circuit Court Clerk’s Office. And if you later need to qualify you can still do so.

Notify Beneficiaries and Creditors

If you probate the Will, whether you qualify or not, Virginia law spells out the notice requirements – to heirs (persons who would inherit if there is no will) and beneficiaries. The notice requirements are time sensitive. The Circuit Court Clerk’s Office provides you the forms you should use. Even if you don’t qualify, you are required to send out notices to heirs and beneficiaries. Notifying the creditors is a prudent step, but early notification is not required by law.

Keep Estate Assets Segregated; If You Qualify Create an Estate Bank Account

Just because a person dies, doesn’t mean that money stops coming in and bills no longer need to be paid. It’s wise to set up a separate account where post-mortem income, like paychecks or money owed from other sources can be held. Additionally, the personal representative must keep on top of paying the deceased’s bills. You can safely cut off the deceased’s cable TV service for example, but expenses like mortgage payments and utility bills must continue to be addressed.

Prepare an Inventory of Assets and a List of Liabilities

Within four months of qualifying a personal representative must file with the Commissioner of Accounts a written inventory of estate assets. The valuation of those assets should be the value as of the date of death. So from early on you should begin keeping good records of what you are doing. And a personal representative is also responsible for paying, from the assets of the estate, all valid debts of the deceased. So you should look through the financial records of the deceased closely to try and identify all debts. If no one is living at the residence of the deceased, you should have the USPS forward the deceased’s mail to your address.

Manage the Estate Property

Pay Creditors; Do So Before Making Distributions to Beneficiaries

A personal representative is not personally liable for the deceased’s debts, but if you make mistakes in managing the estate assets you can become personally liable. Be careful when distributing any money – for payment of debts or to beneficiaries. You should only pay valid debts, and you don’t want to make distributions to beneficiaries before making absolutely sure you have enough assets to pay all valid debts.

File Tax Returns

The executor needs to ensure that the deceased’s tax returns are timely filed. For final income tax returns, the timeframe is generally the first of the current year through the date of death (April 15th deadline, just as if they were alive). For very large estates, estate tax returns (both federal and possibly state if applicable) may have to be filed as well. And even if the estate is below the current threshold for estate tax liability, in some cases you may still want to file an estate tax return for the purpose of electing what is called portability of the exclusion. Generally, federal estate tax returns are due nine months after the date of death, but six-month extensions are available with some advance notice and an estimated payment.

Distribute Assets to Beneficiaries

Once all debts are settled, the personal representative must distribute the estate’s assets to the beneficiaries. If there is a Last Will, it will control who gets what, and the executor must follow its instructions. This includes setting up trusts or other entities outlined in the document. If no will exists, then state intestacy law, here is Virginia’s, determines how everything is distributed. Note that an executor may be require to liquidate property that isn’t specifically specified in the will in order to meet other obligations in the document. This can be an emotional stage, as there’s very little rhyme or reason as to what beneficiaries will fight over. It’s important to keep lines of communication open and try to balance everyone’s competing interests.

If there’s anything left over in the estate after all of the will’s specific distributions have been made, then it’s the executor’s responsibility to dispose of it – typically in accordance with what is called the residuary clause of the Last Will.

Maintain Open Communication with Beneficiaries and Others

I wrote this in the previous section, but it is worth its own heading. Many difficult estate administration situations can be made easier, or even the difficulties avoided, if the personal representative regularly and openly communicates with others about what is happening with the estate.

Make Timely Filings with the Commissioner of Accounts

We noted earlier the inventory filing requirement. In most cases the personal representative will also be required to file annual accountings. These are due four months after the end of each twelve-month period, starting from the date of qualification. It is very helpful to keep the lines of communication open with the Commissioner’s office. Most offices in Virginia are staffed with persons who are willing to help and guide the personal representative, but they cannot and will not give legal advice. Mark Shepard, the Commissioner of Accounts in Henrico County, which surrounds the City of Richmond, has a website with very helpful information for persons who have matters before his office.

Pay yourself for your services

This is not a legal requirement, but neither is working for free an obligation. Doing a proper job as executor takes time and effort. The law permits you to be paid for your services. We’ve rarely seem this, but the Last Will can set forth a fee schedule. Absent that, the law allows you to take a reasonable compensation for your services. Many jurisdictions in Virginia follow a Uniform Fee Schedule. Commissioner Shepard has a page on his website detailing  how his office handles executor compensation.

Hire professionals to help you

Advice and guidance from an experienced lawyer and CPA can save you from headache and heartache or worse. Our law firm regularly offers guidance to Virginia executors and administrators. In simple estates sometimes an hour-long consultation is all that is needed. But situations are as varied as the people and families involved, and occasionally the counsel of an experienced professional is needed from start to finish. Questions like, should I or can I sell the real estate? Sometimes there are different interpretations of language used in a Last Will. More than once we’ve seen the situation where a child is living in the late parent’s house and does not want (or cannot afford) to move, even though the house is now owned jointly by that child and his siblings.

Our firm will find the answers to your questions and keep you on the right track. We enjoy working closely with our clients to find the best solution in a challenging and often emotionally-charged situation. If you would like help with your estate administration situation, call us at 804.756.4600, or Contact Us.