Good morning, folks. It’s Andy Stautz with Stautz Law, and I am back for another talk about Indiana probate and estate planning. Today, we’re talking about personal representative privileges. Really, personal representatives’ lack of privileges.
Background: What Does the P.R. Do?
So, a little bit of background. The personal representative is the person in a probate estate who is in charge of running the show, right? This is a synonym of executor, if you’ve heard of that. Okay, so the personal representative is appointed by the court in both a supervised and an unsupervised estate. And they’re given these letters, letters testamentary, letters of administration, depending on the case, that gives the person legal authority to go gather up the decedent’s property, you know, set it aside in this separate estate account, manage the accounts, you know, settle claims, all of this.
The Personal Representative Doesn’t Get a Bigger Share
The biggest single issue I run into with choice of personal representative or with heirs, heirship situations, you know, is when heirs are suspicious, like, does the personal representative get extra, right? Like, should we fight to be the personal representative because it’s like a privileged position?
And the answer very generally is no. Okay, the personal representative doesn’t get an extra share of the estate. So if there are, let’s say it’s an intestate estate, there’s no will, there’s just three adult children. Okay, the three adult children are going to get equal thirds, and the child who decides to be the personal representative doesn’t get half all of a sudden, okay, they still get equal thirds.
So the choice of personal representative does not affect the basic distribution scheme.
The choice of personal representative does not affect the basic distribution scheme.
Personal Representative Fees are Not a Windfall
That said, the personal representative is allowed to take a fee, basically like an hourly rate for his or her work doing the personal representative duties, right? Because It’s a lot of paperwork. It’s a lot of administrative time. You know, you got to deal with, me, the lawyer, whatever. You got to be on the phone with a lawyer all the time. So it is work. It’s a job. And the personal representative is allowed to take a reasonable fee for that work. In general, though, and personal representatives’ fees are a big topic, I suppose, but In general, it should be indifferent, right? It should be, the fee should be just enough to compensate for the work so that anybody would take it or leave it, right? It needs to be about, it needs to be about like that. So it shouldn’t be like this big bonus to the personal representative. So that’s where, when I say it doesn’t change the distribution to be a personal representative, And yes, you get a fee, but the fee is just to make up for the work, and it is a lot of work.
The Personal Representative Job is Not Worth a Fight
So there you have it. So the basic, I guess the point of recording this talk is to say, most of the time, for most people, You don’t need, siblings don’t need to fight about who’s going to be the personal representative, or heirs don’t need to fight about it.
Because, you know, for someone who isn’t the personal representative, you can pretty much just sit back, keep an eye on things, but just wait for your distribution at the end. You know, review the accountings and such to make sure it’s going right, but it’s easier not to be the personal representative, right?
And that presumes that the personal representative who does serve is a diligent, responsible person. So, if you’ve got your pick, you want, you want the most like business-like, check the box, diligent child. We’ve talked about this in other talks, right? You don’t want someone debilitated by grief. You also don’t want someone who has no fixed address. But, you know, as long as the personal representative is suited to the job, And as long as the, estate counsel, the probate lawyer is, honest and upstanding and trustworthy, (me) it’s easier not to be the personal representative. Being the personal representative is an important job. You got to do it right. But it’s work and it shouldn’t be like there are no, there are not such special privileges that it should be like a prize to be fought for.
Conclusion
Okay. So I suppose that was a basic overview, but the key question is, does the personal representative get an extra share? No. Do they get a reasonable fee for their work? Yes, but I think you’d have to be pretty silly to take on the job just for the fee, right?
Most people do it because they want to honor the decedent and make sure their affairs are taken care of diligently and fairly.
That’s all I’ve got for today. Thanks for listening. And if you’ve got any questions, you’re probably on my website. Give me a call, give me an e-mail. I’d love to talk more about your specific situation.
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Hi folks, it’s Andy Stautz at Stautz Law. I am back talking about fiduciary choices. I just recorded a talk, but it got a little long and there’s more to talk about. So this is about the difference between corporate and personal or individual fiduciaries.
Two Types of Fiduciaries: Personal and Professional
In my last video I mentioned that you want to think about the competence of your fiduciary, how they’re going to be doing emotionally, you know, kind of whom to choose. And I mentioned that one option is to use a bank or a trust company or an independent fiduciary and the other option is use a family member or friend.
Kind of two big categories. There might be more.
That’s what I think of. By far the two most common.
Advantages of Choosing Family Members as Fiduciaries
So the advantage of a family or friend, just a personal fiduciary, is trust, right? You know them. It’s inexpensive and informal. I mentioned last time that you know, in probate cases, a lot of times a family member will “disclaim” — they will turn down the fee that they would ordinarily be entitled to. So that can be nice. You know, if someone just does it for you as a favor. Saves your heirs some money or saves your, you know, trust beneficiaries money.
Advantages of Choosing Professional Fiduciaries
The other big option is corporate trustees. The advantages there are, you know, they’re good at it because they do it a lot. You know they’re going to cross their T’s and dot their i’s and you know they’re going to be independent.
That really helps with some of these behavioral trusts. You know, if you’re setting up a trust to protect a spendthrift from themself, you’ve got an addict or a gambling problem. If you name a family member or friend the trustee, they’re always going to be in conflict with the beneficiary, right? The beneficiary is always going to be going and saying… Wanting… putting pressure on the trustee.
A bank or trust company is going to have a much easier job of saying “no” and not harming existing relationships by being put in that role of standing between a trust beneficiary and the trust corpus.
Disadvantages of Personal Trustees and Executors
Now the downside to family members, of course, is like I said, emotion. Personal relationships, you know. And also it’s a big ask emotionally. Practically you don’t necessarily know someone in your life who’s going to who’s in a good position to have the time, the expertise to administer a trust for you or to handle your estate.
Disadvantages of Professional Fiduciaries
The disadvantage of corporate trustees or, you know, professional fiduciaries in general, is they’re going to be expensive, right? They’re not going to waive their fees. So that adds to the administrative cost of a trust. It adds to the expenses of an estate. You know, it can obviously be worth it. But that’s a consideration.
And some of these, trust companies and banks, there’s a minimum for them. Where they’re not going to administer a small, you know, grandchildren’s trust with $50,000 in it, right? It’s not worth their time. So below a certain threshold, you might not even be able to attract an independent professional fiduciary. You’ve got to be up into a certain level of assets and complexity for that to make sense.
Conclusion: Take Time to Think – It’s a Big Decision
So those are kind of the considerations and like I concluded in my last video, you know it’s specific if it’s based on your goals. Whom you know, whom you trust, what you want to have happen. But it bears thinking about so. So do think about it before your initial planning meeting or after, because it’s an under-considered topic, I think, for most people, until they come in and say, Oh yeah. Big choice of whom to name.
Call me when you want to talk. I look forward to working through these problems and coming up with the best plan for you. Thanks and bye for now.
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Book your initial planning meeting with Stautz Law and we’ll discuss your individual needs. No obligation.
Hi folks, it’s Andy Stautz at Stautz Law. I’m back with another talk about an estate planning topic. And this is another one of those overlooked things, in my opinion, and that is. Whom to choose for your fiduciaries.
What are “Fiduciaries” in Estate Planning?
What do I mean by that? Well, as part of your estate plan, I’m always, in every case, going to recommend that you include a financial power of attorney. And an advanced directive for healthcare. And you’re also going to need in your will or in your revocable trust (any trust, really) you’re also going to need fiduciaries there.
So you need someone to be your power of attorney. That’s one fiduciary. You need someone to be your Health care representative. That’s another one. You need someone to be your personal representative. (You know, the executor in old language) of your estate if you’ve got a Will. You also need a successor trustee in the case of a revocable trust.
That’s a lot of different roles.
Key Point: You Can Choose Different People for Different Roles
I think it’s important to point out that it doesn’t have to be the same person for all of them, right? You can choose one person and say, you know, this person really knows about my values, ethics. You know, regarding healthcare, they can be a great healthcare representative where they need to decide, you know life support or you know medical procedures.
But maybe they don’t have a financial mind or they’re not good with numbers and accounting. Well, it’s OK! You can have a healthcare representative who’s good at one thing, you can choose someone else to be a successor trustee or a financial power of attorney.
So that’s one big point: Choose your fiduciary or fiduciaries based on what they’re good at, right?
Being an Executor is Not an Honorary Position
Which brings me to the second point. A fiduciary appointment is not an honorary position. I think people you know say, oh, you know. My spouse is the most important person in my life. I want her to be my executor. Or I want him to be my successor trustee. Or parents.
But here’s the thing: One: It’s a lot of work. It comes up all the time in estate administrations where at first a personal representative will say, oh, I don’t want the fee for my work on the estate as personal representative. And I say track your time anyway. And then months and months and months later, after doing all the work, it’s like, well, yeah, I do want the fee; that that was more work than I expected. So, you know, you gotta consider it is work.
Two: it requires certain skills which we touched on earlier. You know, if it’s a trustee role and there’s going to be accounting; an executor or personal representative role where you need to make an inventory and you need to get things appraised. You know you need to make sure you get the right skills.
And third is emotions. You know your executor acts when you are dead, so if it’s someone really close to you, they’re going through a lot emotionally. They’re going to be grieving you. And they might or might not want to have this extra administrative burden on top of their grief. It’s just not a good time to be asked to sort through all that.
Common Examples of Fiduciary Choices
So. Those are kind of your big concerns. So the classic choice for lots of these fiduciaries is family members, and that’s great because you know, if you’ve got family members you that’s where the trust comes from. You know them; you trust them. That’s the most important thing. But like I said it it’s a big ask. It can be it can be heavy.
Your other option is an independent or corporate fiduciary. So you know banks have trust departments, they can do this for you. There are independent fiduciaries out there whose whose job it is to serve as a personal representative or successor trustee.
And I have heard from time to time of attorneys doing it for their clients. I don’t do that. I think there’s a an implicit conflict there. I won’t serve as a fiduciary for clients, where I’m also the one putting together the trust. But you could always go to a different attorney, maybe to see if they do that.
So that’s a big picture for you. You know, lots to think about, but you need to kind of balance all those considerations and the choice you make is going to be different for everybody. So I’ll probably return to this in another talk because there are a couple more things I didn’t get to, but this has been long already. Thanks for listening and I hope it helps you as you’re as you’re planning and give me a call when you’re ready to talk. Bye now.
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