Responsibilities of a Legal Representative of Deceased’s Estate
When a person passes away, his estate needs to be represented by a legal representative (sometime known as personal representative) to sort out the estate settlement and distribution issues. If he dies intestate (without a will or with an invalid will), the legal representative is the court appointed administrator. If he dies testate (with a valid will), the legal representative is known as executor.
Who can be a legal representative of a deceased person’s estate?
It is commonly assumed that only the next of kin can be the legal representative of a deceased person’s estate. Though this is usually the case, the role can also be legally taken by others. For example, the creditor of the estate can apply to be the administrator.
Responsibilities of a legal representative include:
Calling in Assets
The first duty of a legal representative is to determine the extent of the assets and liabilities of the deceased. This process is known as “calling in assets”. This process could be onerous if the deceased does not have a proper assets and liabilities inventory, or if the estate is a large one consisting of various types of assets, financial or otherwise.
In the process of calling in the assets, the legal representative needs to notify all the relevant financial institutions and other interested parties.
After calling the assets, the legal representative may need to arrange for the valuation to establish the value of the assets if necessary.
Setting up an Estate Account
The second duty of a legal representative is to open an account in the name of the estate of the deceased with himself being signatory to the account. This account is to receive the estate assets, for example life insurance proceeds (those without beneficiary nomination), and is to be used to settle the debts of the estate.
The Trustee Act empowers the legal representative to employ accountants for this purpose, and if the estate is large, it is advisable to do so. There is no audit requirement; therefore simple accounts will be sufficient for the purpose of administering the estate. Unless there is a dispute, the court can order the accounts to be properly audited.
Collecting any income owing and pay off all debts
The third duty of the legal representative is to collect all income owed to the deceased, and to pay off all debts. If the estate is a large one, the legal representative should invite creditors through an advertisement (through a Gazette or in the newspaper) to submit their respective claims against the estate.
Reasonable funeral expenses have to be paid out first from a deceased’s estate before the payment of any debt or any other tax.
The legal representative has to ensure that any estate tax incurred or outstanding income tax of the deceased is filed and settled promptly.
Holding the estate in trust and distribute to the beneficiaries
The last duty of the legal representative is to assume the role of an estate trustee and distribute the estate to the beneficiaries, according to the terms in the will or according to intestacy laws. The responsibilities of the estate trustee are furthered described in other sections of this web-site.
Legal liabilities of a legal representative
The responsibility of a legal representative is a serious one. If inadequate effort is put into administering the estate, the legal representative can be sued for breach of trust or negligence by the beneficiaries or the estate creditors. Therefore, one needs to seriously consider the appointment of an executor in his will. It would be wise to appoint a professional executor or trustee.
Points to take note of:
- Throughout the whole process of administering the estate, the legal representative has to keep up frequent communication with the beneficiaries and estate creditors to minimise any conflicts or misunderstandings.
- Though there is no audit requirement on the estate account, it is advisable for the legal representative to keep a simple accounting statement and use that as a basis for communication with the estate stakeholders.