Handling Assets Incorrectly
One of the first things a personal representative must do is secure all of the decedent’s assets. Accomplishing this requires taking different steps for different types of assets. For example, financial accounts may simply need to be closed, whereas real property (such as a house) might have to be secured and maintained.
Categorizing Assets Incorrectly
Some assets do not have to go through probate. When you inventory assets, it is important to make sure you categorize them properly.
Assets that are not typically subject to probate include:
- Assets held in trusts
- Funds held in certain “beneficiary designated” accounts (that is, accounts where beneficiaries have already been designated)
- Certain forms of property held jointly
Many personal representatives fail to properly track trust assets, which can lead to the personal representative being held personally liable for any mistakes.
Failing to Properly Value Assets
The term “date of death values” refers to the fair market value of each estate asset at the time of the decedent’s passing. The sooner this task is undertaken, the easier it will be to determine the correct value. Personal representatives often turn to professional appraisers for assistance with this task.
Handling Creditors Improperly
Every potential creditor of the estate must be notified about the estate going into probate. The probate must be kept open for a period of time mandated by state statute to allow creditors to file claims against the decedent’s estate. However, creditors are not automatically entitled to receive payment. There is a very specific provision under the law that the creditors have to follow in order to get paid.
Failing to Communicate Effectively with Estate Beneficiaries
Working closely with beneficiaries is not a legal requirement, but failing to keep them abreast of developments can be a big mistake. In fact, poor communication sometimes leads to unnecessary, and expensive, litigation. Remember: You are not the only one dealing with the loss of a loved one—so, too, are the decedent’s heirs. It is an emotional time for them, and they may feel slighted or ill-treated if you don’t stay in touch with them.
Distributing Estate Assets Too Soon
As the estate’s personal representative, you have the authority to distribute assets to beneficiaries as well as to approve and pay creditor claims. However, sometimes an estate lacks sufficient assets to honor bequests made in the will and pay every creditor claim. In such a situation, creditors must be prioritized according to the law and assets must be dispersed based on that prioritization. Distributing estate assets before court approval could result in heirs having to refund assets and the personal representative being held personally liable.
Failing to Factor-in Taxes
While most estates in Maryland are not subject to estate or inheritance taxes, the personal representative must know when they do apply and how to properly plan for them.
Working with our probate attorneys will allow you to avoid costly mistakes like these. We invite you to contact us for a personal meeting to discuss your situation.