Personal representatives (AKA Executor) are fiduciaries. Fiduciaries are people or institutions legally obliged to act in your interests.
You may have heard the term “Executor” of your estate. In Oregon, these people are referred to as Personal Representatives. “A personal representative is a fiduciary who is under a general duty to and shall collect the income from property of the estate in the possession of the personal representative and preserve, settle and distribute the estate in accordance with the terms of the will and ORS (Oregon Revised Statutes) … as expeditiously and with as little sacrifice of value as is reasonable under the circumstances.” ORS §114.265. http://www.oregonlaws.org/ors/114.265
A Personal Representative can be a personal friend or family member, a professional, or an institution.
Why do I need a personal representative?
The law requires a personal representative (executor) because someone must be responsible for administering the estate.
What does a personal representative do, anyway?
Duties of the personal representative:
- Marshalling the assets of the estate. This means, identifying every source of wealth, such as real estate, life insurance policies, IRA and retirement accounts, business holdings, valuable personal property, bank accounts, and even frequent flyer miles and other rewards memberships.
- Protect the estate property. Once the assets are identified, keep the asset from theft, loss, or depreciation in value. If the person lived alone, the personal representative could change the locks on real property and program lights to go on and off in the home.
- Inventory all the assets.
- Assisting the attorney to probate the will.
- Filing all necessary forms. These include IRS Form 56 (Notice Concerning Fiduciary Relationship) https://www.irs.gov/pub/irs-pdf/f56.pdf; IRS Form SS 4 (Application for federal EIN) https://www.irs.gov/pub/irs-pdf/fss4.pdf; and file, or hire the correct professional to file final tax returns.
- Pay the final tax for the individual’s estate.
- Pay all known creditors and close the accounts. With the certificate of death, the personal representative will contact the deceased person’s credit card companies, gas and electric, magazine and internet subscriptions.
- Closing, inventorying, or marshalling of online assets. Be aware, the representative may not use the deceased person’s password to access any online accounts. There are laws that prohibit this conduct and penalties can be severe.
- Represent the estate if the individual or estate had claims against others.
- Managing the expectations and relationships of beneficiaries (“Where’s my inheritance”? “Why is it taking so long”? “Dad promised me that car. I don’t care what the will says”!)
- Distribute the estate property to the beneficiaries.
- Hiring one or more professionals to accomplish the items in this list.
The personal representative may have to sell some of the assets in order to accomplish these duties.
Who can and cannot be a personal representative?
Your personal representative must be at least 18 years old and of sound mind — that is, not judged incapacitated by a court (ORS §113.095) (ORS §109.510)
Also, a lawyer who has been disbarred or suspended cannot serve as personal representative. Nor may a licensed funeral service practitioner serve as personal representative, unless they are a relative of the deceased or the deceased was in the funeral business and the personal representative was their business partner. (Id.)
Should I choose a family member as my personal representative?
If you think that your beneficiaries won’t cooperate with one another then you should name someone outside the family and someone who is not a beneficiary as your personal representative. Naming your spouse is usually a good idea but understand that your spouse will be grieving and may not want or be able to shoulder the responsibility in its entirety. It is important to note that your spouse will be personally liable for tax obligations in administering your estate
You can choose more than one person to fulfill these duties: co-executors or co-trustees. One with expertise and one with close ties to the family. You must also choose a successor in case your first choice dies or is unable to serve. If you have business interests, you may want to consider naming someone who is familiar with the business to be your personal representative for business purposes only.
Do personal representatives get paid?
A personal representative may receive 7 percent of any estate valued below $1,000, 4 percent of an estate worth $1,000 to $10,000, 3 percent of an estate of $10,000 to $50,000 and 2 percent of any estate valued at more than $50,000. Additionally, an executor is entitled to 1 percent of any property owned outside of Oregon. A court may grant additional compensation for unusual or extraordinary circumstances. (ORS § 116.173). A personal representative is allowed to waive their fees. http://www.oregonlaws.org/ors/116.173
This is not an exhaustive list or a complete picture of the nuanced role a personal representative fulfills. Everyone’s estate is different. If you have question, please contact me and I will help.