Probate is a court process that results in the distribution of the property of the deceased, known as the decedent, to the decedent’s beneficiaries and heirs. The decedent’s assets are collectively referred to as the estate. To handle the decedent’s assets and manage the distribution of the estate, the court appoints an executor, who is typically named in the decedent's will. In some states, including California, the executor is known as the personal representative. If there is no will, the court appoints an estate administrator to perform these duties. The executor is charged with a number of responsibilities with respect to the estate. Although the court supervises the executor, an executor who fails to perform these responsibilities reasonably can be sued for mismanagement.
Managing the Property of the Estate
An executor, or personal representative, has a legal duty to manage the property of the estate reasonably. This duty includes the obligation to keep the estate’s property separate from any property belonging to someone else, including the executor, to prevent any later confusion as to which property is included in the estate. If managing money or investment assets, such as stocks and bonds, the executor must manage those assets with the same level of care that a person of ordinary prudence would exercise. This means that the executor cannot make risky decisions regarding the property, unless a prudent person would do so. Whether an executor acts prudently varies with the specific circumstances. The executor must refrain from spending the estate’s money without the permission of the court or the direction of an attorney.
Inventorying the Property of the Estate
The responsibility of inventorying the estate’s property lies with the personal representative, or executor. The process of inventorying the estate’s assets begins with making a reasonable attempt to locate all the assets belonging to the decedent. Upon the discovery of an asset, the executor must take possession of it. Once he locates the assets located and has them in his possession, the executor must then determine their value. The value of the assets is essential in determining the property that the beneficiaries of the estate receive once the decedent’s debts are paid. The executor must arrange with the court to have an appraisal of the assets. The executor must then provide the court with an itemized list of the estate’s assets and their value.
Maintaining Court Records
The personal representative, or executor, must always keep in mind that she is managing the property of the decedent, rather than her own assets. To deter mismanagement of the estate’s assets, the executor must keep scrupulous records that document each financial transaction that involves the estate. A financial transaction includes money or other property used by the estate in exchange for some service, as well as any money or property received by the estate. The executor must file the income and expense records with the court for review. Failing to comply with this requirement can result in the court ordering the executor’s compliance, or ordering the removal of the executor from service.
As part of the probate process, the executor must pay off those debts the decedent owed at the time of death, including income and any other tax. Because the decedent’s debtors are likely unaware of the death, the executor is responsible for providing notice of the death to the creditors. The California probate code requires three separate published notifications of the decedent's death in certain newspapers, published once a week or more often, with at least five days intervening between the first and last publication dates. Proof of the publication must be filed with the court. In the case of known or reasonably ascertainable creditors, the personal representative must give written notice directly to the creditors. The creditors can then file claims for payment with the court. To protect the value of the assets, the executor must also secure insurance in an amount sufficient to reimburse the estate for the total value of the assets. Once the debts are paid off, the personal representative is responsible for distributing the remainder of the decedent’s property to the beneficiaries named in the will.
Read More: Responsibilities of the Executor of a Will After Death