Personal Representative Mistakes in Probate

In probate, there are two types of personal representatives:

Executor: “A person named by a testator to carry out the provisions in the testator’s will.” Black’s Law Dictionary (9th Edition).

Administrator: “A person appointed by the court to manage the assets and liabilities of an intestate decedent.” Black’s Law Dictionary (9th Edition).

Below is a list of mistakes a personal representative came make during the probate process of an estate:

1.Making an early distribution too soon.

Distributions must be made in accordance with the provisions and directives in the Last Will and Testament, as well as the Kentucky Revised Statutes.  If there is no Last Will and Testament, then in accordance with the intestate succession laws in the Kentucky Revised Statutes.  In Kentucky, an estate must remain open in probate a minimum of six months so as to allow creditors an opportunity to make any claims against the estate.  Distributions to heirs during this six month period can be risky. If an early distribution is made and a valid claim comes in to the estate, there may not be sufficient funds from the estate to cover the claim.  Further, beyond the six month period, there may still be additional expenses required to be paid by the estate, such as attorney’s fees, taxes, etc. In that instance, the personal representative would have to seek the money back from the heirs to pay for these expenses.  If that is unsuccessful, then the personal representative will be liable for cover the claim due to their breach of fiduciary duty in handling the financial affairs of the estate. Even though a personal representative may be feeling pressure from beneficiaries to make an early distribution, they should always err on the side of caution and take the necessary time to ensure there are no loose ends and that everything is correct.

2. Mishandling estate funds.

A personal representative owes duties of good faith, trust, confidence, and candor to the estate.  Beneficiaries have standing to challenge any breach of this fiduciary duty or failure of the personal representative to exercise a high standard of care in managing the estate.  Some basic breaches of fiduciary duty that can occur when handling estate funds are financial malfeasance, self-dealing, commingling of estate funds with the personal representative’s personal funds, and failing to keep accurate records so the beneficiaries have enough information to understand their beneficiary interests.

3.Improper/insufficient communication with beneficiaries.

Personal representatives need to be careful in communicating with beneficiaries, particularly when any issues arise.  If their communication is direct with the beneficiaries, they should first consult with an attorney to ensure no improper representations or miscommunications occur.  Personal representatives who have an attorney representing them on behalf of the estate can have the attorney handle all communication to the beneficiaries to avoid possible improper communications.  There are also several required steps in Kentucky throughout the probate process, in the form of the initial Petition and subsequent Inventory that are filed with the Court, thus informing the beneficiaries of the assets of the estate.  Beneficiaries are also required to sign a written Receipt and Waiver acknowledging they have received their distributive share, which is filed with the Court at the conclusion of an estate, along with a formal/informal final settlement.

4.Poor handling of beneficiary conflict.

Sometimes conflict can occur between beneficiaries in an estate, such as how to divide personal property, which items to liquidate, etc.  There can also be conflict when a beneficiary takes an asset “in-kind” as part of their share of the estate. This can create conflict if the beneficiaries do not agree on the value of the “in-kind” asset.  The personal representative must first consult the directives of the Last Will and Testament.  If there are no provisions to address such a conflict, or if there was no Last Will and Testament, then the personal representative may need to engage the services of an appraiser.  Further, if the personal representative has an attorney, they should always consult with their attorney regarding conflict resolution among beneficiaries.

5.Failure to obtain consents and waivers before closing the estate.

As stated above, in Kentucky, beneficiaries are required to sign a written Receipt and Waiver acknowledging they have received the full distributive share of the estate pursuant to the terms of the Last Will and Testament or the intestate succession statute if there is no Last Will and Testament.  This should also include a release of the fiduciary from any claim in relation to the estate.  If any early distribution is made to beneficiaries, the personal representative should like obtain a Receipt from the beneficiaries acknowledging their receipt of same.

6.Delays in final distribution.

Delays in final distributions can occur for a lot of different reasons.  There could be a dispute between beneficiaries themselves or with the estate, thus resulting in litigation will which cause the estate to remain open until the litigation has concluded.  There could also be litigation involving a creditor, which must be concluded before distribution can be made. A beneficiary could die, thus requiring their heirs to open an estate in order to receive the distribution.  There could be tax issues that need to be resolved. Issues with real estate or personal property that is difficult to sell.