Tag Archives: personal representative

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Young lady is holding an advertisement for a document preparation company

Document preparation company for a probate?

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Document preparers promise to do cheap divorces, bankruptcies … and probates. Is this a good idea? Should you use a document preparation company for a probate?

The short answer is NO (for most situations). I’ve been practicing law for 15 years now. I believe a document preparer could work if you have a very basic situation. Basic situations might be:

  • The deceased person left a valid will that an attorney prepared, and there is only one person in that will who is entitled to everything (and that same person is also named as the Personal Representative).
  • The person died without a will, and there is only one person entitled to everything. For example, the person died with no children and there is a surviving spouse.

Otherwise, I think it’s a recipe for mistakes and a family fight if you attempt to use a document preparation company. Here are some common disasters that can happen:

  1. The document preparer will suggest that everyone sign a Waiver of Bond. Bond is a form of insurance that protects against the Personal Representative stealing assets or mismanaging the estate. It’s surprisingly common for a Personal Rep to not act fairly. Bond protects the other family members from misbehavior by the Personal Representative.
  2. The document preparation company won’t check the Will for ambiguities or read the Will to see if what it says makes sense. If the estate gets distributed contrary to what the Will says, the Personal Rep could be on the hook personally for the mistake.
  3. Creditor claims can be complicated. For example, when should you deny a creditor claim?
  4. If you have a statement from a creditor (like a hospital or ambulance bill), and you send that company a Notice to Creditors, does the creditor need to send you another statement (like the Notice to Creditors says)? If you fail to deny a claim within a certain period of time, it is considered allowed and the estate need to pay it.
  5. The document preparation company won’t think through other issues. For example, how to transfer the property. A Will might way that Personal Representative should transfer the house to the deceased parent’s four kids. But that could turn into a fiasco if the kids can’t agree on what to do with the property. It would be better to have an attorney work with the family. The lawyer will fix such a situation before it turns into a problem.
  6. If a step mom or step dad is involved, you need a lawyer. There will almost certainly be conflict over division of the personal property. What if the step parent refuses to divide any of the deceased parent’s belongings with the children. It’s best to have a lawyer involved for such cases.

These are just some common situations that came to me when writing this. Just remember this: If the probate situation is really, really simple, a document preparer could handle it for you. But most cases these days are more complicated. Especially if you’re dealing with a blended family or multiple brothers or sisters.

If you have any questions, give us a call at 602-443-4888. We promise to talk straight with you. If you don’t need an attorney, we’ll let you know.


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Should you waive bond?

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If your loved one died either without a Will, or with a Will that fails to specify if bond is waived, the person nominated as Personal Representative (aka, Executor) will probably ask the other heirs to waive bond.  (Click here to see a sample Waiver of Bond form.)  Should you waive bond?

What is bond? Bond (in terms of a probate) is a type of fiduciary insurance policy that insures against the Personal Representative improperly administering the estate or stealing assets.  In order to qualify for bond, the Personal Rep needs to either have good credit and a net worth that equals the value of the estate, or find someone who meets those qualifications to co-sign as a guarantor.

The main reason that a nominated Personal Representative will ask other family members to waive bond is the PR can’t qualify because he or she has bad credit or does not have a sufficient net worth.  This is a bad sign.  Do you want someone who the credit reporting agencies recognize as a bad money manager being in charge of your loved one’s estate?  Probably not.

You don’t have to be nice.  It’s okay to protect yourself.  Require the PR to post bond.  It will protect yourself in case the PR acts improperly.  If you give in, and sign the Waiver of Bond form, it’s hard to unwind that.  If the PR gains control of the estate and steals money or makes bad decisions, you won’t find out for at least six months to a year. By then, the money could be gone.  Even if you then file a Petition to remove the Personal Representative and get a judgment against the PR for the missing money, do you really think you can collect against someone with few assets and poor credit?  Good luck!

If you have any questions about what to do, reach out for help.  Call a probate attorney at Magellan Law (at 602-443-4888) and ask for a free consultation.  You may need to pay an attorney for a little time to assist you.  But that will be money well spent.


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When One Party to a Contract Dies

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If one party to a contract dies, the deceased person’s estate can usually simply enforce the agreement the same as if the original party to the contract were still alive. However, things can get even more complicated when dealing with family. For example, let’s say that one person loans money to another, such as when a parent loans money to a child. Is the contract still enforceable even when one party to a contract dies? Being a lawyer, my answer is, “It depends.”

For purposes of this post, I’m going to assume that there once was a valid contract. In other words, I’m not going to analyze the requirements to form a valid contract (such as offer, acceptance, lack of valid defenses, etc.). And I’m not going to analyze whether it was required to have been in writing (such as for a contract to transfer real property). However, I will discus some of the trickier issues that can arise when a person who is part of a contract (in other words, a “party to the contract”) dies.

Statute of Limitations Issues. A statute of limitations is a statute that limits the amount of time within which you can bring a legal action to enforce a contract. In Arizona, for example, a legal action to enforce a written contract signed in Arizona must be brought within six years of the breach. See A.R.S. 12-548. But what happens when we are dealing with family members?

Imagine this example: A parent loaned money to a child 10 years ago, and the parties signed a written loan agreement. The loan agreement stated the amount that was due and the interest rate. However, it did not provide a due date. The parent just died. Is the contract enforceable by the parent’s estate? Probably yes, unless some other defense applied, such as laches.

How about if the contract required periodic payments, plus an optional acceleration clause on the due date of each matured but unpaid installment? In that event, the six-year period would begin to run on the due date of each matured but unpaid installment. As to unmatured future installments, the period commences on the date the creditor exercises the optional acceleration clause. Navy Fed. Credit Union v. Jones, 187 Ariz. 493, 930 P.2d 1007, 233 Ariz. Adv. Rep. 47, 1996 Ariz. App. LEXIS 281 (Ariz. Ct. App. 1996).

Discovery Rule. This is the rule that a claim accrues when the plaintiff knew or should have known by exercise of reasonable diligence that the plaintiff had been injured. Gust, Rosenfeld & Henderson v. Prudential Ins. Co. of Am., 182 Ariz. 586, 898 P.2d 964, 193 Ariz. Adv. Rep. 3, 1995 Ariz. LEXIS 55 (Ariz. 1995). The important inquiry in applying the discovery rule is whether the plaintiff’s injury or the conduct causing the injury is difficult for the plaintiff to detect. Gust, Rosenfeld & Henderson v. Prudential Ins. Co. of Am., 182 Ariz. 586, 898 P.2d 964, 193 Ariz. Adv. Rep. 3, 1995 Ariz. LEXIS 55 (Ariz. 1995).

Dead Man’s Statute. Arizona’s “Dead Man’s Statute” provides that “neither party shall be allowed to testify against the other as to any transaction with or statement by the testator…unless called to testify thereto by the opposite party, or required to testify thereto by the court.” A.R.S. § 12–2251. While most other states have eliminated their Dead Man’s Statutes, Arizona still has such a statute. However, it is discretionary. Personally, I have raised the Arizona Dead Man’s Statute multiple times over the years. In the context of a dispute over a written promissory note, the issue might be whether the debtor made payments that he claims should have reduced the debt. Verbal discussions with the deceased person over whether there was an agreement that payments or services (such as repairing the deceased person’s roof) were to be applied to the amount owing on the debt would usually fall within the Dead Man’s Statute. However, I have yet to witness a probate judge or commissioner actually keep evidence out based on the statute. Similarly, such discussions also typically fall within the definition of hearsay, but such hearsay statements are usually allowed in as freely as the shirttail relatives that often attend probate hearings.

This is by no means an exhaustive discussion. If you are trying to enforcement a contract against a deceased person’s estate (or if you are in charge of an estate involving such a situation), you really need an attorney.

If you have had any experience involving the enforcement of a contract when one of the parties has died, please share below.

 


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Petition for Removal of Personal Representative

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Hey, this is attorney Paul Deloughery. I’ve been practicing probate litigation since 2007. One of the things I often get asked to do is to remove a Personal Representative (also known as the Executor) who is not performing his or her duties. Read more here.

How do you remove a Personal Representative who has already been appointed by the court? You hire a good probate litigation attorney. And that attorney follows A.R.S. Section 14-3611 regarding the removal of a Personal Representative. The attorney will also look at all of the various duties of a Personal Representative and make a list of various ways in which the PR has failed to live up to the required standards.

Here is a list of common failings by a Personal Representatives that can support removal of that person:
1. Failing to provide the heirs with an Inventory and Appraisement within 90 days of being appointed.
2. Failing to sell the house.
3. Failing to fairly distribute the personal property.
4. Failing to file tax returns or pay the taxes.
5. Using the estate money for his or her own personal use. (also referred to as “stealing”)

The nerve-racking part to this is needing to wait. If you didn’t get the Inventory exactly 90 days after the PR was appointed, you can’t file a Petition for Removal of Personal Representative the next day. The courts are fairly forgiving at first. Being two months to provide the Inventory will warrant a status conference with the judge. It won’t be enough to remove the PR yet.

However, there is a tipping point. If the Inventory is late, AND there is evidence that the Personal Representative is not treating the heirs fairly (as required by the Will or statute), AND there is some evidence that the PR is using the estate money personally, then that is probably enough to justify having the court appoint a successor PR.

The best thing to do is to talk to a probate litigation attorney. If you have any questions, give us a call at 602-443-4888. We will listen to your specific situation and tell you your options.


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Removing a Personal Representative: How to Appoint a Successor

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Removing a Personal Representative How to Appoint a SuccessorIn the last few posts, we’ve looked at the first two steps in removing an ineffective personal representativegathering evidence and petitioning the court. Once these steps are completed, you will need to appoint a successor. You’ll want to be particularly careful in choosing a qualified replacement after going through the effort to remove an ineffective personal representative.

If you think you can do a better job yourself than the person who had been personal representative, think twice. Before nominating yourself for the position, you should understand the responsibilities and duties of a personal representative. While you may be qualified to fulfill the role, it may be more than you really want to deal with.

Serving as a personal representative in an estate is time-consuming and requires great attention to detail. You will need to work closely with both your probate attorney and a CPA to make sure that everything is done properly. This includes the inventory of the estate, detailed recordkeeping, annual accountings of the estate, and other details that you might not have considered.

Here are a few criteria to consider when deciding whom to appoint as personal representative:

A personal representative must be bondable. This means the person can be insured against fraudulent acts. Most states require this measure to protect the beneficiaries of the estate. The size of the personal representative bond must equal the amount of the estate’s estimated value. (For instance, you would need to have a net worth of $5 million in order to be bondable to administer a $5 million estate.)

A personal representative must have good business sense. Managing an estate requires a lot of the same skills needed to run a business. It’s a big responsibility. Personal representatives are held to higher standards in managing the estate than they would be in their own personal affairs. The courts take this responsibility very seriously.

A personal representative must be reliable and of good character. Choosing a personal representative who suffers from drug or alcohol addiction is an obvious bad move. And of course choose someone who does not have a criminal record.

The replacement personal representative is often appointed in the same petition that removed the original personal representative. You will work closely with your probate litigation attorney throughout the petition process.

A hearing will be scheduled after the petition is filed with the court. Depending on the case, the petition process can require several hearings that will eventually lead to the trial. (Actually, in probate court, the trial is called an evidentiary hearing.)

Unfortunately, the process of appointing a new representative is rarely quick. In uncontested cases with ample evidence, the case can be resolved within a few weeks. However, it usually takes several months to resolve the issue in contested cases.

Petitioning to replace a personal representative can be an emotional and overwhelming task. The guidance and assistance of a lawyer familiar with probate litigation can help make the process less challenging (and less lengthy). Look for a skilled litigation attorney to be your advocate in protecting your inheritance, and to make a difficult time easier for you and your family.

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Petitioning to Remove a Personal Representative

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Petitioning to Remove a Personal RepresentativeIn the previous post we covered how to gather evidence to remove a personal representative. Once you have the necessary documentation as evidence, you can petition the court to remove the personal representative and appoint a successor.

The first step in petitioning the courts is to work with your probate litigation attorney to put together a formal Petition for Removal of Personal Representative and Appointment of Successor Personal Representative.

The Petition needs to include specific details that will be used as evidence to justify the removal of the personal representative. The more evidence and documentation that you can provide to the judge, the better your case. (Documentation should clearly show mismanagement of the estate, such as copies of checks drawn on the estate written to the personal representative, indicating that the representative is using estate money for personal gain.)

Once you have compiled the initial paperwork, the next step is to discuss with your attorney how quickly you should act to remove the representative. Discuss with your attorney if you can petition the court for emergency relief, if you feel this is necessary. The courts will work with you if you can prove that there’s an urgent need to replace an ineffective (or dishonest) personal representative. Probate judges and commissioners are both extremely busy and also extremely reluctant to take immediate action to remove a personal representative. The process of removing a personal representative normally takes months.

However, there are things you can do in the meanwhile. You can get a Temporary Restraining Order preventing the personal representative (or others) from taking action detrimental to the estate. You can request an Expedited Order for Formal Administration, meaning that the Personal Representative will need to get the court’s approval before taking any future action.

If the court approves the emergency status here, the court will take action quicker than it would otherwise. In most cases, there will still need to be at least one hearing. In any event, your lawyer can help you in arranging this.

If your case is not urgent, it will likely take the court anywhere from a few weeks to a couple of months before it intervenes. Everyone involved in the estate will need to be notified of this process. (Again, remember that there are often steps that can be taken to protect the estate in the meanwhile.)

There is normally more than one hearing. The first one, known as a “return hearing,” determines whether anyone objects to your petition. If that happens, then the court will require an additional hearing, or hearings, to sort out the situation.

Because each case is different, there’s no set standard for the amount of time or number of hearings a case will take to be settled. On average, you can expect the process of getting a court order to remove a personal representative to take between three to six months. In certain situations, such as where you are able to provide evidence that the personal representative is stealing assets or jeopardizing the value of the estate, the court might take more immediate action.

It’s important to keep an eye on the progress of the case, especially if you’re expecting an inheritance.

Be proactive. Seek the help of an experienced probate attorney if you suspect things related to the estate aren’t being handled correctly. Waiting to take action can jeopardize the estate and your loved one’s legacy. (Once money is spent or things have been stolen, it’s usually pretty hard to get it back.)

If you need help petitioning to remove an ineffective personal representative or trustee, please contact our office.

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How to Remove a Personal Representative

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How to Remove a Personal RepresentativeSome situations in the handling of an estate warrant the removal and replacement of the executor (called a “personal representative” in Arizona) who’s been appointed by the court.

Although the person accepting the position agrees to comply with a list of laws and court orders, sometimes the representative falls short for some reason.

If the PR fails to perform the expected duties, then the deceased’s family and beneficiaries can seek help from probate court.

During the first few months of a representative’s term, when this person is learning what is required to administer an estate, the probate court is somewhat lenient. After a period of time, however, if the representative hasn’t fulfilled the required specified duties or followed procedures properly, the person may be removed as personal representative.

A PR can be removed for any of four basic reasons:

  1. If it’s in the best interest of the estate;
  2. If the personal representative had lied in the court proceeding leading to that person’s appointment as personal representative;
  3. If the personal representative disregarded a court order, has become incapable of discharging the duties of being personal representative, has mismanaged the estate, or has failed to perform any duty pertaining to the office of personal representative;
  4. If it is shown that the personal representative has intentionally disregarded the decedent’s wishes with regard to disposing of the decedent’s remains.

If you find that the PR is not fulfilling the duties of the position, the first thing you need to do is gather evidence. If it concerns the misuse of the estate’s funds, evidence can include documents such as copies of checks written to the personal representative or a copy of the deed showing that the PR transferred the decedents’ house to him or herself.

Evidence needs to be concrete. That is, the court usually does not accept situational evidence or hearsay as evidence to support removal of a PR. An example of hearsay might be a neighbor telling you that the PR said that he or she was going to steal the estate’s money or assets.

Evidence to support the removal of a personal representative can also include:

  • The fact that you have not received an inventory of the estate more than 90 days since the personal representative was appointed
  • The fact that the estate has been open for more than a year and the personal representative has not filed the required annual accounting.
  • The decedent’s house has not been listed for sale a year or more after the appointment of the personal representative.

In our firm, we frequently help families who need to remove personal representatives. It’s usually not a single incident that leads to this: In most cases the personal representative has done between five and 15 things incorrectly.

If you’re a personal representative and need help understanding and performing your duties, we can also help. If you need assistance in removing a personal representative to protect your loved one’s legacy, we can help with that, too.

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Pitfalls of Estate Planning: When Assets Are Used for Personal Benefit

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When Assets Are Used for Personal BenefitA trustee must never use the assets of a trust for personal benefit (unless this is specifically permitted by the trust). There’s really no wiggle room here. Trustees are held to the highest legal standards.

If you’re serving as a trustee, conservator or guardian, it’s important to clearly understand the duties of your position to be certain that you are performing your duties correctly and to protect yourself and reduce your liability in case of error.

Most cases where assets are mismanaged involve trusts. This is because trusts are normally unsupervised. As a result, it’s not uncommon for a trustee to neglect providing beneficiaries with annual accountings or to keep detailed bookkeeping records. Laws vary by states, but in Arizona, current law requires that a trustee give annual accountings and provide beneficiaries sufficient information to protect their interests.

Some trustees, unfortunately, take the breach of duty further and use an estate’s funds for their personal use. Taking family vacations, buying cars or paying off a personal mortgage are all examples where a trustee has breached fiduciary duty by misusing trust assets.

Here are the three biggest mistakes trustees make when managing trust assets:

  1. Failing to keep records.
  2. Taking unauthorized personal “loans” from the trust.
  3. Using assets for personal use – and thinking they won’t get caught.

A trustee who mismanages trust assets—whether intentional or unintentional—can face severe legal consequences. But you should know that if you’re serving as a trustee and don’t understand your responsibilities and duties, you don’t have to do it alone. An attorney with experience in trust management can help you avoid making costly mistakes and ensure that you’re aware of your responsibilities.

From the other side, if you’re a beneficiary and you suspect the trustee is mismanaging assets, don’t wait to take action. Seek legal counsel from a skilled probate attorney.

Settling an estate is a complex process. Probate court offers resources and recourse for those who are working to settle a loved one’s estate. We’d love to help make this process easier for you and your family. Give us a call with any questions about how you can properly manage a trust, and what you can do when trust assets are being mismanaged.

In the next post, we’ll look at how to deal with estate conflict in probate disputes.

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The Role of a Personal Representative, Part 2

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The Role of an Estate Planning Representative, Part 2As I mentioned in my previous video, a good estate plan covers key life decisions. Your personal representative will be the one to make the necessary decisions to carry out your wishes.

Here are further responsibilities, based on the law in Arizona, but pertinent no matter where you live in the U.S.

  1. Provide an inventory of assets. This is where having an attorney with some experience comes in handy to help you classify different types of assets, especially personal property like furniture, ceramics or porcelain and photographs.
  2. Comply with the applicable standards of care. As personal representative, you are required to perform duties with prudence, reasonable care and caution.
  3. Keep detailed records. Keep and maintain records of everything: copies of checks, receipts, bills. Everything. You need to be able to prove where every dollar goes. So, avoid dealing in cash.
  4. Pay valid debts and expenses. There’s a specific procedure for determining whether a debt is valid. This takes into account all the debt and how to treat creditors equally as part of a personal representative’s fiduciary duty.
  5. Pay applicable taxes. Always pay applicable taxes before paying creditors and distributing assets.
  6. Distribute remaining assets. After all taxes and expenses have been paid, the remainder of assets can be distributed as the will has specified.
  7. Change the address of the estate. Until probate is closed and you complete your role as personal representative, you must notify the court in writing if you move or if your mailing address changes.
  8. Document payment your receipt of payment as personal representative. It’s important to document meticulously the time you’ve spent and the expenses you’ve incurred when seeking reimbursement from the estate you’re managing.
  9. Court involvement. The court prefers minimal involvement in settling estates where a personal representative has been appointed, but will get involved if the estate is not closed within two years.

To be sure your wishes are carried out, carefully select a personal representative for your estate. A little extra planning now can protect your family’s future. You can read more about a personal representative’s duties here.

If you have any questions about the duties of a personal representative, I’d love to help.


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What are the Duties of a Personal Representative?

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What are the Duties of a Personal RepresentativeA good estate plan covers key life decisions such as what happens to your home and other assets if you die. It also addresses who will care for your children and financial assets if you pass away. Your personal representative will be the one to make the necessary decisions to carry out your wishes.

The role of personal representative is a big responsibility. Settling the estate of a deceased person requires attention to detail. It’s important to select someone who is qualified for this position regardless of your net worth.

Specific duties and responsibilities can vary slightly from state to state. I practice in Arizona, but in this two-part overview, you’ll be able to get a sense of the duties of a personal representative, regardless of where you live in the United States.

  1. Act as personal representative. Perform fiduciary duty of fairness and impartiality to the beneficiaries and to the creditors, to be cautious and prudent in dealing with the state assets.
  2. Gather, control and manage estate assets. This is not moving into the deceased parent’s house and taking over assets for personal use. The personal representative oversees the execution of the will and makes sure that the assets are distributed according to the will.
  3. Provide notice of the appointment. You will need to notify your state’s revenue department and all of the heirs and devisees that you have been appointed. These heirs and devisees have four months to contest the probate.
  4. Provide notice of the admission of the will to probate. This is a form that gets filed with the court and delivered to those involved in the estate. It explains the duties and responsibilities of a personal representative.
  5. Mail copies of the order to the personal representative. You must mail copies of the order to the personal representative to the heirs and devisees.
  6. File proof of compliance. A notarized statement must be filed with the court affirming that the order to the personal representative was sent out.
  7. Publish notice to creditors with the court. You will need to notify creditors that they have a certain period of time to file a claim and give them instructions on how to file and pursue being paid.
  8. Protect assets. It is your responsibility to secure and keep valuables safe.
  9. Determine whether there are any statutory allowances. Statutory allowances can include a homestead allowance, exempt property allowance and a family allowance.

We will continue with this list in our next post. This is an important part of estate-planning. It doesn’t have to be complicated, but it does help if you have a sense of what the roles and responsibilities of a personal representative are.

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Wills and Estate Planning: Appointing a Personal Representative

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Wills and Estate Planning Appointing a Personal RepresentativePart of creating a will is naming a personal representative. A personal representative is responsible for managing the estate of another, including the probate assets.

To name a personal representative, you must first have a valid will in place. The will should specifically name who you want to manage your estate. Most people choose a representative they already know and can trust. Acting as a personal representative is a big responsibility. It’s best to choose a personal representative who has enough time as well as the financial stability to fulfill the demands of the role.

It’s also important to choose a personal representative who is good with details and record-keeping. A personal representative is held to the very highest standard and must act in the estate’s best interest. If the representative fails to pay taxes, distributes assets to the wrong person or in the wrong proportions, fails to pay creditors before distributing assets (among other things) he or she can be held personally responsible. And your intended beneficiaries can end up getting less than they should have.

If the person named in the will is unqualified to manage the estate for whatever reason – whether this person is a drug addict, gambler, spendthrift or otherwise unavailable – you can request a hearing in probate court to seek to have the second person listed on the will appointed as representative.

In high-conflict situations where family tension is running high, it’s often best to enlist the services of a licensed fiduciary or a trust company. In Arizona, a professional private fiduciary is licensed by the Arizona Supreme Court and will know how to get the job done. While there is a fee to hire a third party fiduciary, having a licensed fiduciary will often save you money by avoiding drawn-out court battles.

The position of a personal representative can be burdensome. It’s important to select someone who is not only willing, but qualified to fill the position. If you don’t have family or friends qualified, enlist the help of a licensed fiduciary.

We offer a multi‑page list that details all the tasks a personal representative must tend to when manage an estate. Do you have any questions about appointing a personal representative? Please comment and let me know.

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