If you've been appointed or named as personal representative of a deceased person's estate in Ohio, you already know you have a lengthy "to-do" list. However, you may not have thought much about what NOT to do as the personal representative of the estate.
Here are some rules for how to avoid trouble when you're administering a loved one's estate.
Anyone who would be entitled to inherit from the deceased if he or she died without a will is entitled to notice of the probate of an estate. Heirs may choose to waive their right to notice, but the personal representative is obligated to go through the process of giving notice or securing a waiver. This is usually routine, but can be touchy, say, if Uncle Joe had a child out of wedlock who was never publicly acknowledged but whom everyone knew about. Don't be tempted to do an end run around the law. Notify everyone who has a legal right to notice.
Part of the reason for the probate process is to allow the personal representative to notify potential creditors of the deceased and give them time to come forward and make their claims against the estate. If you distribute any assets before the process for receiving creditor claims is completed, you may find that there is not enough money left in the estate to pay all legitimate claims. If that's the case, you may be exposed to personal liability for distributing the assets prematurely.
This should be obvious, but you would be surprised how many people "borrow" from estate funds when they run short in their own accounts, with the full intention of paying the money back. Sometimes they do, often they don't, but it's always a bad idea. As personal representative, you are legally and ethically bound to to act in the best interests of the estate. It's best to open a bank account for the estate at the outset of administration, funnel all estate funds into that account, and keep that money entirely separate from your own. Using estate funds, even temporarily, for your own purposes is theft, plain and simple.
Just because a claim is submitted against the estate does not mean that it's legitimate. But just because a claim is not legitimate doesn't mean that you can simply blow it off and fail to respond to it. There is a process for dealing with disputed claims against an estate in Ohio, and a time frame for doing so. Even if a claim appears ridiculous, don't be tempted to ignore it. If the claim is truly not legitimate, following the proper procedures will ensure it is put to rest. If you ignore a claim and don't go through the procedure to dispute it, you may later be forced to settle it, even if it might have been disallowed if you had followed the rules.
In Ohio, creditors have six months after the death to present claims in writing, and personal representatives have thirty days after receipt of a claim to allow or disallow it.
As personal representative, you may be acting on behalf of the estate of a parent or spouse who chose you to do so, but you are acting only because the probate court has granted you authority. You are subject to the jurisdiction of the probate court, which means the court has power to order you to do something. If you fail to obey a court order, depending on the circumstances, you could be held in contempt of court, exposed to personal liability, fined, removed from your position as personal representative, or some combination of the above.
Two things in life are certain: death and taxes, and sometimes they go hand in hand. As personal representative, you are responsible for seeing that the estate's tax returns are filed. While you may hire an accountant or tax preparer to do this, at bottom, it is your responsibility to make sure it is done, and the probate court may hold you liable if it is not. While most Ohio estates do not have to pay a federal estate tax, there will be both state and federal income tax returns to file for the estate.
Estate administration is about distributing assets to heirs and beneficiaries, yes. But that's the last step in the process, and must not be carried out until ALL other business is concluded: the period for creditors to make claims, payment of taxes, and payment of fees for services to the estate, and a final accounting to the probate court. If you distribute all of the estate's funds to heirs and beneficiaries, then discover that you are entitled to reimbursement or there is an outstanding unpaid bill for services to the estate, you will find it very difficult to reclaim the money from heirs who have received, and possibly spent, their distribution.
If reading all of the potential pitfalls above made you a little nervous, don't panic. Not only do you not need to manage the administration of an Ohio estate on your own, you are not expected to. Ohio considers the services of an attorney and other professionals like tax preparers to be a benefit to the estate, and so those fees come out of estate funds. Don't think that you're saving the estate money by failing to hire professional help; in fact, the opposite is often true. Making sure things are done right the first time expedites the handling of the estate and gets any assets more quickly to where they belong—the hands of the deceased person's loved ones.
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