One only needs to look at the beginning of the Bible to know that stories of sibling rivalry and dispute are not uncommon. In the probate law world, it is not unusual for us probate attorneys to hear stories of clients filing a lawsuit to have a sibling removed as the personal representative of an estate.
Following a death, the person’s assets will be gathered, business affairs settled, debts paid, necessary tax returns filed, and assets distributed as the deceased individual (generally referred to as the “decedent”) directed. These activities generally will be conducted on behalf of the decedent by a person acting in a fiduciary capacity, either as executor (in some states called a personal representative), an administrator (if the person dies without a will) or as trustee, depending upon how the decedent held his or her property.
In most instances, when a person dies owning property of more than a de minimis value, it is necessary to appoint someone to administer the estate. That person (it could be one or more individuals, a bank or trust company, or both) who acts for, or “stands in the shoes of,” the deceased is generally called the personal representative. If the decedent dies “testate” – that is, with a Will – an Executor is appointed as the personal representative. If the decedent dies intestate – i.e., without a Will – an Administrator is appointed as the personal representative. The duties and responsibilities of the personal representative, and even the title of the personal representative, may change depending on the state laws and circumstances involved, but the need for such a person (or persons) is shared by all.
There can be other issues for the personal representative to handle aside from those involving financial considerations. For example, a decedent might have had a child from a previous marriage for whom he was paying support. There could have been an outstanding agreement under which the decedent, or the decedent and his wife, was to purchase real estate, with the settlement or closing date after the date of the decedent’s death. Even if the decedent’s affairs were precisely in order and there were no outstanding personal or business debts, a personal representative might be necessary to distribute the decedent’s assets among his spouse and the children. There are, in fact, few situations in which property of a decedent can be transferred at death without the appointment of a personal representative.
As a first step, it is helpful to know the meaning of a few common terms:
“Administrator” – (A woman is sometimes called an “administratrix”) An individual (or sometimes a trust company) that settles the estate of a decedent who dies without a will according to the state laws of intestacy.
“Fiduciary” – An individual or trust company that acts for the benefit of another. Trustees, executors, administrators and other types of personal representatives are all fiduciaries.
“Grantor” – (Also called “settlor” or “trustor”) An individual who conveys property by means of a trust; the person whose wishes are expressed in the trust.
“Testator” – A person who has made a valid will (a woman is sometimes called a “testatrix”).
“Beneficiary” – A person for whose benefit a will or trust was made; the person who is to receive property, either outright or in trust, either presently or at a future date.
“Trustee” – An individual or trust company that holds legal title to property for the benefit of another and acts according to the terms of the trust.
“Executor” – (Also called “personal representative”; a woman is sometimes called an “executrix”) An individual or trust company that settles the estate of a testator according to the terms of the will.
“Principal and Income” – Respectively, the property or capital of an estate or trust and the returns from the property, such as interest, dividends, rents, etc. In some cases, gain resulting from appreciation in value may also be income.