What are the fiduciary duties of a Minnesota personal representative? Find out.

Minnesota Probate Law Payment of DebtsIn any Minnesota probate, a personal representative will be appointed to run the estate.

If there are over $75,000 in probate assets, the estate will need to be probated by the personal representative. The assets of the estate will be distributed to the heirs of the deceased person.   Distribution can be effectuated by the deceased person’s Will or via an intestate administration.  An intestate administration means someone died without a Will. Typically, a person will work with an attorney to follow the law and understand what they must do according to the law.

We often discuss the legal concept of “fiduciary duties” with out clients.  The personal representative must serve as a “fiduciary” for all heirs, creditors, and other interested parties.

A personal representative’s duties to the heirs

In a typical probate, the personal representative will have a fiduciary duty obligation to the heirs.

A typical situation my office sees is where the children of the deceased person are the only heirs.  In this scenario, the eldest child is often “nominated” by the deceased person to be the personal representative.  The personal representative must pay expenses of the estate and then distribute assets and money to their siblings.  While working on the estate, the personal representative owes fiduciary duties to their siblings – whether they like them or not.  Sibling rivalry can often get in the way of a proper administration.

It is also important to remember that the personal representative has a difficult job and that the money in the estate does not belong to them.  The personal representative is serving the estate. There are many instances of probate litigation (lawsuits) where the personal representative may not be doing what they are supposed to be doing. When thinking about the term fiduciary duty, please try to remember that it means to be honest and fair with the deceased person’s money.

Duties owed to creditors in a Minnesota probate estate

The personal representative will also owe a fiduciary duty to creditors of the estate.  If there is over $75,000 in probate assets, the personal representative is required to distribute assets and pay creditors.

Commonly, the debts of the estate include a mortgage on home, credit-card bills, utilities, and other contractual debts of the deceased person. Sometimes, the estate has very little debt because, as people age, they often pay off the home and other debs.

There are also certain probate asset exemptions which we discussed in previous articles.  Exemptions include:  the homestead of the decedent, $10,000 of personal property, and one automobile.  Life insurance is also an exemption.  This means that assets will not be collectible, in most instances, by creditors.

Paying creditors claims is relatively simple.  If the personal representative has knowledge of money owed to any person or business, those debts should be paid out of the estate. However, there are also instances when a personal representative does not have knowledge of debts owed by the deceased person.  In these instances, the notice of publication – which is published in the newspaper –  will be published so that unknown creditors have four months in Minnesota to file a claim against the estate.  It is very important for the personal representative to work hard to discover debts that need to be paid.  After payment of debts (minus exemptions), the remaining money will then be distributed to heirs.

As a warning to people who may be considering serving as a personal representative – not paying estate debts is where liability of the personal representative most often arises. This is because, at times, the personal representative may not be diligent in discovering otherwise known creditors.  Obviously, this can be a very large problem.  The court may hold the personal representative liable for not doing their job correctly.

An personal representative may want to speak with a probate attorney

For further information about the meaning of personal representative duties, and fiduciary duties, contact Flanders Law Firm LLC at 612-424-0398.  The firm offers free initial consultations in all cases.

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