Choose Wisely: Naming the Personal Representative of Your Estate

If you have a will instead of a trust, choosing the person or company to shepherd your estate through the probate process should be made only after careful consideration.

Put yourself in this scenario: You are nearing retirement and have created a living will, granted a power of attorney and made a conventional Last Will and Testament. Compared to society at large, you are ahead of the game, estate planning-wise. But making sure that all of your planning is truly in place hinges on at least one critical factor: choosing the right party to serve as the personal representative of your estate. 

Depending on which state you called home before moving to Arizona, “executor” might be a more familiar term than “personal representative.” The latter (“PR” for short) is used here, and both terms refer to the person who, after your death, is responsible for managing the assets of your estate, paying your debts, making sure that your assets are distributed to your intended recipients, and shepherding your estate through the probate process.

The person you choose to be your PR can make a huge difference as to whether your wishes are followed, everything is handled properly, and unnecessary probate-related costs are avoided. Simply put, a PR administers the estate and is in charge until the probate is legally closed. As a 2011 New York Times article suggests, serving as an executor or PR is a big responsibility, and your selection of that person should not be made lightly (see “Choosing the Right Executor for Your Estate”).

When you pass away, your Will must be admitted to probate. After your PR has paid any debts and taxes owed by your estate, he or she will distribute the remainder of your property per the instructions in your Will. If there is an estate tax audit or the will is contested, your PR will oversee that process, too. If you have a complex estate, or if someone isn’t happy with your intended distribution of assets, the job can last for a couple of years or longer.

It’s not uncommon for the maker of a Will to name an adult child to be the PR. That might be a good choice, if their temperament, integrity and skill set allow them to carry out their duties effectively. Your child presumably knows your intentions and can readily find the assets that need to be inventoried.

However, if there is bad blood among your children, or if you have a blended family, naming as PR a child who might be part of a future controversy is a perilous move. Even worse is naming two rival siblings as “co-personal representatives.” If asking one or more of your kids to manage your estate is not an option, choosing an attorney, financial professional or professional fiduciary might be a sound choice, as might be a trusted, common-sense friend or relative who doesn’t have a “dog in the fight.”

Line of Succession

Once you settle on a PR, your selection work isn’t quite finished, and you should also pick one or more alternative PRs to step in if your first candidate is unable or unwilling to perform. Your choice of alternate PR is especially important if there is a reasonable possibility that you will outlive your primary PR. Including in your Will a specific line of succession among your primary and alternate PRs will minimize the possibility that the court will appoint as PR a person whom you would have rejected.

Reducing the PR’s Workload

A smart way to cut costs and reduce wear-and-tear on your PR is to limit the assets that will be subject to probate. Trust assets, life insurance, savings bonds, retirement accounts, real estate and jointly held bank and brokerage accounts generally are immune to probate and, thus, are not part of your PR’s responsibility. An experienced estate planning attorney can help you title assets in such a way that they will pass to the new owners outside of probate.

Other Considerations

Another 2011 article (“Choose the Right Executor or Trustee”), at the AARP website, offers some additional factors in choosing your PR, including revisiting your choice every few years.

“Your perfect pick today may become supremely unwise tomorrow,” the article warns, especially if divorce or estrangement has destroyed a relationship that you were counting on when you made your Will. “Avoid such situations by revisiting your choices after major life changes.”

You might be considering naming an institutional PR (such as a bank or trust company) instead of a flesh-and-blood model. That can carry a high price tag, and the article suggests doing that “only when there’s severe family dysfunction or you don’t have anyone qualified or who wants to serve.” Another scenario in which using an institutional PR might make sense is in, as was mentioned above, a blended-family situation.

In short, as with many end-of-life planning decisions, revisiting your choice of PR after major life changes can help ensure that your wishes are followed, with a minimum of controversy among your heirs.

Adapted from the Daily Plan-It newsletter