Inventory and Accounting - Additional Duties of the Personal Representative

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Among the many duties of the Personal Representative is the duty to conduct an inventory and accounting of the property that the decedent held in his or her name at the time of death. The value of these items will be used to calculate the probate court inventory fee as well as to determine what, if any, federal income tax may be due.

The type of assets to be reported to the probate court on the Inventory and Accounting form is only the property that was owned at the time of death that did not pass by virtue of a beneficiary designation, by rights of survivorship, transfer on death or payable on death designation. In other words, only that property that is in the control of the personal representative need be included on the inventory.

Property that automatically passed to another person at the moment of death, whether by joint ownership, beneficiary (ie: life insurance), title, deed, TOD or POD on bank accounts, etc. does not get listed on the estate inventory.

Additionally, property that is titled in the name of a trust is not included in the probate court inventory and accounting. This is another reason to have a trust. The property is managed by the original co-trustees and upon the death of the second to die, the successor trustee liquidates and distributes the trust property to the designated beneficiaries (Note that property in a revocable trust, such as a life insurance policy, may be countable as decedent's assets for federal estate tax purposes).

Within 91 days the personal representative is required to prepare the inventory and accounting and, as closely as possible, disclose all property in enough detail to identify it and list its fair market value. In addition to the specific property or assets owned by the decedent, the personal representative must include any encumbrances on the property that may exist and the amount of that encumbrance.

This list of property must be sent to all distributees and any other interested party that request it. The personal representative does not have to file a copy of the inventory and accounting with the probate court however, the personal representative must provide enough information to the court to allow them to calculate the probate inventory fee. If any assets are found after the list of property has been prepared and presented, the personal representative may file a supplemental inventory and accounting or appraisal of the already submitted inventory items if it is discovered the original value was incorrect.

Personal representatives are specifically empowered to hire appraisers to determine the fair market value of property held in the estate. This is important as the personal representative holds the property in a fiduciary capacity. It may become necessary to insure the decedent's property to protect it against accidental loss or destruction.

Typical use of an appraiser is common to compile the inventory and accounting and determine the value of items such as coin collections, stamp collections, real estate, aircraft, automobiles, boats and private businesses. It is required that the inventory disclose the appraiser's name and address of each appraiser used to determine value of various property.

Duty of personal representative to manage estate assets wisely. During the time that a personal representative will be administering the estate of a decedent, he or she may find it necessary to invest and manage the assets of the estate. In Michigan, a fiduciary is required to use what is called the "Prudent Investor Rule." This dictates that a personal representative exercise reasonable caution, care, skill and good sense in investing the money, stocks, bonds, mutual funds, real estate, etc. that comprise the estate assets.

This is a situation in which a personal representative may find himself personally on the hook for any losses to the estate assets if it is found that the personal representative was negligent in the handling of estate assets. If a personal representative is not skilled in investing, he or she may want to hire a professional financial consultant to help diversify the estate assets to protect against loss. Under MCLA 700.1504, MSA 27.11504 a fiduciary, such as a personal representative, is under a duty to diversify the investments of an estate unless it can be shown that it was better not to diversify under the circumstances.

This duty to diversify and manage estate assets is incurred at the filing of the will to probate and the acceptance of appointment as personal representative. The personal representative should review all assets and make decisions whether to hold them where they are or to move them to a more prudent investment vehicle to maximize safety and rate of return. This review of assets may also include the decision to sell certain assets if it appears holding them would result in diminishing value to the estate.

See also Estate Adminstration

Other duties of the personal representative, in regard to the estate assets, include the Duty of Impartiality. A personal representative must be impartial when it comes to the different interests of the various beneficiaries. When it becomes necessary to make a distribution from the residue of the estate, it is imperative that the personal representative makes a pro-rata distribution among the beneficiaries. The personal representative should endeavor to keep the lines of communication open and help the beneficiaries compromise when necessary.

Another duty of the personal representative is to minimize cost. Investing and managing assets may incur costs. These costs should be kept to a minimum considering the size and complexity of the estate assets. These costs should be reasonable and appropriate in considering the relation of the costs to the assets.

Inventory and Accounting - Compare to Personal Representative

Disclaimer: The information contained in this site is not comprehensive and should not be construed as legal advice. Further, reliance on any information contained in this website does not constitute the formation of an attorney/client relationship. The law discussed herein is complex and constantly changing. You should seek the assistance of an experienced attorney for specific legal advice regarding your particular circumstances.

Milford, Oakland County, Michigan

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Raymond C. Barry & Associates, PLLC

1100 Corporate Office Drive, Suite 100

Milford, Michigan 48381

248-676-2233