Serving as Personal Representative of an Estate: What is a “Reasonably Ascertainable” Creditor?

December 10, 2012 by Bart Chepenik

When probating an estate (i.e., distributing a deceased person’s assets), a personal representative is responsible for seeing that the process is carried out in accordance with the deceased person’s wishes and state law. Some very common questions often arise in this context: What exactly are the duties of a personal representative? What steps is a personal representative required to take in order to properly fulfill those duties.

The Florida Probate Code dictates the rights, duties, and responsibilities of being a personal representative of an estate. One of the many obligations that comes with the role of personal representative is the duty to notify creditors of the death of a debtor. This gives creditors the opportunity to satisfy the debt from the estate. Once the creditors are notified, they have a certain period of time to file a claim against the estate. Florida Statute § 733.2121(3)(a) says that “[t]he personal representative shall promptly make a diligent search to determine the names and addresses of creditors of the decedent who are reasonably ascertainable, even if the claims are unmatured, contingent, or unliquidated, and shall promptly serve a copy of the notice on those creditors. Impracticable and extended searches are not required.” Depending on the type of creditor, the statute of limitations to file a claim is either two years from the notice for “readily ascertainable” creditors or within a three month window for creditors who are not “reasonably ascertainable.” What does all of this mean? When does a search go from reasonable to impracticable? What is “readily ascertainable”?

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What Control Does a Personal Representative Have Over Assets Held in a Professional Association?

December 19, 2011 by

Many questions may arise when a person passes away and the person’s professional association holds some assets. The professional association may be a corporation, which is a separate legal entity from the person. In this case the personal representative will not have automatic entitlement to the business assets. This remains true even if the deceased person owns 100% of the corporation. For example if a person owns a successful corporation that operates throughout several South Florida counties and the owner passes away, his probate administration may be conducted in Broward County. The personal representative of the estate may wish to reach the corporation’s assets to satisfy the deceased person’s estate obligations. However, Florida courts have decided against letting a personal representative receive automatic control of the business or its assets.

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Duties of a Personal Representative in Florida

June 17, 2011 by Bradley H. Trushin

The appointed personal representative of a Florida resident’s estate, i.e. the individual placed in charge of distributing the assets of the estate, must abide by certain fiduciary duties that he or she owes to the beneficiaries (the individuals named to receive assets) of the estate. Suppose you are named a beneficiary of your recently deceased grandfather’s estate whose domiciliary was in Miami Beach. Under Florida law, the personal representative must abide by certain duties to ensure that you receive the assets that the estate leaves in your name. Florida Probate Code section 733.602 states that a personal representative has a duty “to settle and distribute the estate of the decedent in accordance with the terms of the decedent’s will…as expeditiously and efficiently as is consistent with the best interests of the estate.”

A personal representative necessarily enjoys broad powers to administer an estate of a decedent. Pursuant to Florida Probate Code section 733.608, the personal representative holds all of the “real and personal property of the decedent, except the protected homestead” and “the rents, income, issues, and profits” from any such property. The personal representative then uses these assets to pay specific devises (set amounts of gifts or money), the family allowance, any elective share, estate taxes, and other expenses incurred during the administration of the estate. Additionally, the personal representative distributes any assets to named beneficiaries of the will in accordance with the will’s terms.

Thus, a personal representative must take actions necessary, but in accordance with the law, to effectively administer a decedent’s estate. However, if you are a beneficiary of an estate and feel that the personal representative is not acting in the estate’s best interests, you may have some recourse. Under Florida Probate Code section 733.504, a personal representative may be removed for various reasons. The reasons provided for under the Code include, but are not limited to, the following: (1) a court determination that the personal representative is incapacitated, (2) physical or mental incapacity that renders the person unable to carry out his or her duties, (3) wasting or maladministration of the estate, (4) conviction of a felony, and (5) having conflicting or adverse interests against the estate that will interfere with its administration. Therefore, it is important for you, as an entitled beneficiary, to make sure that the personal representative is not in breach of any of his or her duties owed to you or any other beneficiary under the will.

If you or someone you know lives in the West Palm, Fort Lauderdale, or the Miami-Dade area and is a beneficiary of an estate who believes that the personal representative is not properly handling the administration of the estate, the probate litigation team at Chepenik Trushin will help you obtain the proper legal relief. Please feel free to contact us for an initial first consultation.

Compensation of a Personal Representative in Florida

June 16, 2009 by Bart Chepenik

For his or her services, a personal representative of an estate is entitled to compensation from the estate assets, without a court order. Florida Statute §733.617 provides the general rule in Florida for the commission of a personal representative. The Statute provides that the commission will be presumed reasonable for ordinary services provided by the personal representative. The commission is based on the value of the estate, which includes the inventory value of the probate estate assets and any income earned by those assets during administration. The commission is calculated as follows: 3% for the first $1 million, 2.5% above $1 million and not exceeding $5 million, 2% above $5 million and not exceeding $10 million, and 1.5% for all above $10 million.

For example, assume an estate where decedent was domiciled in Palm Beach, Broward or Dade County, is valued at $20 million dollars. The personal representative is entitled to 3 percent of the first $1 million dollars or $30,000. For the amount between $1 million and $5 million dollars, the personal representative is entitled to 2.5 percent or $100,000. For the amount between $5 million and $10 million dollars, the personal representative is entitled to 2 percent or $100,000. And for the amount above $10 million and up to our $20 million dollar estate, the personal representative is entitled to 1.5 percent or $150,000. Thus, for an estate worth $20 million dollars, the personal representative is entitled to $380,000 in commissions.

In addition to this commission, a personal representative is allowed additional reasonable compensation for extraordinary services including sales of real or personal property, conducting litigation for or against the estate, any involvement in court or IRS proceedings, running the decedent’s prior business and issues with protected homestead such as with a home in Fort Lauderdale, Florida.

What if the will sets forth the compensation of a personal representative? If the compensation of a personal representative set forth in a will is different than the compensation set forth in the above referenced statute, the personal representative has a choice of taking either compensation rate. The personal representative will likely want to take the higher of the two compensation schemes. The personal representative also has the option of receiving some or none of the compensation they are entitled to.

What if there is more than one personal representative for an estate? If you have an estate worth at least $100,000 and there are two personal representatives, each personal representative can take the full commission that a sole personal representative would take. However, if there are three or more personal representatives for the estate then all personal representatives must apportion among themselves the compensation that two personal representatives would be entitled to. If the estate is less than $100,000, then one commission must be apportioned among all the personal representatives.

What if the appointed personal representative is also a lawyer and has rendered legal services in connection with the administration of the estate? Under Florida law, an attorney shall receive a fee for their legal services in addition to a full fee as personal representative.

If you or someone you know is interested in bringing an action regarding a personal representative’s compensation, it would be best to consult an attorney to establish a proper strategy to accomplish that goal.

Personal Representative’s Duty to Search for Beneficiaries of an Estate

March 11, 2009 by Bart Chepenik

If you or someone you know has been appointed a personal representative of an estate then it is important to realize that Florida law imposes certain duties on a personal representative to act in the best interest of all interested persons. One of those duties includes determining all possible identities and locations of beneficiaries of that estate.
Although a personal representative does not have to prove beneficiaries’ identities beyond all certainty, they must use reasonable diligence to determine the identity and location of those people who may be heirs to an estate.
It is important for a personal representative to keep a detailed record of their methods of investigations, when trying to determine whom is a potential beneficiary or heir of an estate. This detailed record will allow a personal representative to show that they used an effective search method and prove they have fulfilled their duty. While a personal representative has the autonomy to conduct searches in a variety of ways, the following list indicates some preferred and commonly used search tools: government records from agencies such as Social Security Administration, Internal Revenue Service, The Census Bureau, the Department of Defense, the Department of Homeland Security, and various Property Appraisers websites. Other institutional record holders such as courthouses can provide birth certificates, marriage licenses, marriage applications, death certificates, employment records, adoption applications, records of divorce, child support obligations, custody determinations, and various other administrative paperwork. Personal files and miscellaneous records can also be found from other resources that include those documents contained in hospitals and cemeteries, financial records held by banks, such as deeds to houses and automobiles. Furthermore, it may be helpful to confer with insurance companies, credit unions, credit card companies, etc. Finally, a comprehensive search can include internet searches and other records contained by various civic organizations, religious institutions, and various family records such as genealogical records, pictures and family trees.

Once the information has been collected and a personal representative can determine facts such as the city born, the maiden name, or any other information, they can use this to widen their search to others who could potentially be heirs to an estate.

As can be expected, a search for potential beneficiaries can often be exhaustive and time consuming as much information is needed. However, under Florida law, a personal representative has the duty to act expeditiously and to effectuate this purpose, A personal representative usually can act without a court order or any direction. In an attempt to find out who may be a beneficiary or heir, a personal representative may generally hire a private investigator without the court’s permission, provided that the cost to do so is not unusually great. A court will generally treat the costs incurred by hiring an investigator as those necessary in order to conduct a good faith search.

If you or someone you know has been appointed as a personal representative, it is important that you hire an experienced attorney so that they can help you to determine your rights and duties.

Qualifications of a Personal Representative in Florida

January 6, 2009 by Bart Chepenik

How can one determine whether a personal representative is qualified to be the personal representative? Generally, in the State of Florida any person who is sui juris and is a resident of Florida at the time of the death of the decedent is qualified to act as personal representative. A person is sui juris if they have the capacity to manage their own affairs and are not under any legal disability. A legal disability is any characteristic which by operation of law precludes an individual from having the legal capacity to perform an act. Some legal disabilities that may disqualify a person from acting as a personal representative include being convicted of a felony, having been adjudicated as being mentally or physically unable to perform the duties or if one is under the age of 18.

For example, when Aunt Alice was thirty-five years old, she had a new will drafted and it was validly executed. The will named her twelve year old nephew, Ned as the personal representative of the estate. If Aunt Alice lived to be over eighty years old that would mean her nephew Ned was nearly sixty years old at the time of her passing. Ned’s jealous brother Benjamin contested Ned’s qualifications as the personal representative, alleging that Ned was not qualified to be the personal representative of Aunt Alice’s estate because when the will was executed, Ned was not sui juris because he was only twelve years old at the time.

Assuming Ned still has legal capacity to conduct his own affairs, has not been convicted of a felony and is mentally and physically able to perform the duties of a personal representative, Ned has satisfied all of the qualifications required of a personal representative.

As long as the personal representative is qualified when the decedent dies, it does not matter whether the personal representative was qualified when the decedent’s will was executed.

If you are interested in contesting the qualifications of a personal representative, you should consult an attorney to establish a proper strategy to accomplish that goal.