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

Minnesota Probate Law Payment of DebtsIn any Minnesota probate, a personal representative, or what is often referred to as “executor”, will be appointed to run the estate.  This we know.  What people often don’t know is:   what comes next?

If there are over $50,000 in probate assets, the estate will need to be probated by the personal representative. The assets of the estate will ultimately be distributed to the descendants and for heirs of the deceased person. Again, this can be by Will or or intestate which means 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.

One of the most often discussed issues, in my law practice, includes the fiduciary duty owed by the personal representative to heirs and creditors of the probate estate.

A personal representative’s duty to the heirs

In a typical probate, the personal representative will have a fiduciary duty obligation to heirs. What does this mean?  Essentially, many people die with a Will or, sometimes, without a will.  Also, in many cases, the personal representative, will be obligated so serve as a fiduciary for their brothers and/or sisters.

A very typical situation is where the children of the deceased person will be the only heirs. In a typical scenario, the eldest child may be appointed as the personal representative to pay expenses of the estate and then ultimately distribute assets and money to be respective heirs. The personal representative will owe these duties to their siblings whether they like them or not. Sibling rivalry can often get the way of a proper administration.  In this instance, a professional personal representative may need to be appointed.

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

Duties owed to creditors and Minnesota probate estate

The personal representative will also owe a fiduciary duty to creditors of the estate.  I there is over $50,000 in probate assets, the personal representative will be required to distribute assets but also pay creditors.

Commonly, the debts of the estate 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 will often pay off the home and other debs.

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

Paying creditors claims is relatively simple. If the person representative has knowledge of money owed to any person or business, those debts should be paid out of the estate. However, there are sometimes instances when a person 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 give unknown creditors from four months to possibly a year in Minnesota to file a claim against the estate. It is very important for the personal representative work hard discovered debts that need to be paid, and the remaining money will then be distributed to heirs.

As a warning to people who may be considering serving as personal representatives, this is the area where my personal liability of the personal representative most often come up. This is because, at times, the person representative may not be diligent in discovering otherwise known creditors. Obviously, this can be a very large problem in 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 as a fiduciary, contact the Flanders law firm LLC at 612-424-0398.  The firm offers free initial consultations in all cases.

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