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What fiduciary duties does an estate’s personal representative have?

On Behalf of | Jun 4, 2021 | Fiduciaries |

As you’ve browsed our website, you’ve likely uncovered how personal representatives of estates have various responsibilities that they must fulfill in their role. These include inventorying and safeguarding testators’ assets, paying off their creditors, filing their final tax returns, and distributing estate assets to heirs. Most all of the above-referenced obligations fall under the umbrella of a personal representative’s fiduciary duties. 

In your role as a personal representative, you’re likely to hear the term “fiduciary” used quite frequently. You may find it helpful to learn more about what that word means and how it relates to the specific responsibilities you have in your newfound role.

What are fiduciaries, and what are their responsibilities?

All fiduciaries share one obligation in common: They need to make choices based on their clients’ best interests — even if they go against the fiduciary’s own preferences. 

The first step that personal representatives must take in their role is filing a testator’s will with the local probate court. It’s important that they do this in a timely fashion. They must exercise some degree of effort to preserve the value of any inventoried assets to ensure that they don’t get squandered or destroyed.

Another fiduciary responsibility personal representatives have is to settle up with creditors and pay estate taxes. It’s then their responsibility to prepare the testator’s final tax return and settle up with creditors before distributing any of the estate’s remaining assets to the testator’s heirs. 

In other words, their obligation is to the estate — never themselves. They cannot, for example, borrow money from the estate for their own bills, pay themselves excessive fees for their services to the estate nor waste the estate’s funds through bad investments or neglect.

Penalties exist for personal representatives who fail to uphold their fiduciary duties

Personal representatives may expose themselves to financial liability if they lose track of an estate’s assets, fail to preserve its value or act in their own self-interests. You can avoid this by apprising yourself of your responsibilities and asking questions when you’re unsure of the steps you should take in a particular situation to protect your legal interests.