There may be a time where you are asked by a family member or friend to serve as the executor, which in Arizona is called a personal representative (hereafter, “PR”), of their estate. The question is, should you? While an honor to be asked, acting as PR is a time-consuming, detailed job with many obligations and potential liabilities. Should you serve, you will have to become a detail-orientated individual who is: capable of devoting plenty of time to the role, comfortable with tracking, managing, and eventually selling all assets, and responsible for the accounting of all revenue and expenditures. This is largely due to the fact that a PR is formally appointed and confirmed by a court and, ultimately, must answer to the court.
A primary responsibility of a PR is to serve the estate’s beneficiaries or heirs. Thus, all of a PR’s decisions are subject to second-guessing by interested parties. Should you serve, you must be aware that, often times, a PR will become the arbiter between different beneficiaries with conflicting interests. This may leave some beneficiaries upset with a you. You will also be signing tax returns with the liability that goes along with doing so. Further, a PR is subject to extensive duties and obligations under the law and the tax code. Any interested party may drag you in to court. Unfortunately, should you make an error, or should the court disagree with an act of judgment by you as PR, you may be held personally liable.
In short, acting as PR is not for the fainthearted! The cautions we give to you are:
- Never agree to serve without a careful self-analysis of your personality, strengths, and weaknesses.
- Never enter into this position without consulting with an experienced estate planning attorney to discuss the responsibilities and potential liabilities of serving.
- Be willing to say no (especially to a beneficiary asking you to do something you don’t have explicit authority to do).
- Say yes only if it is appropriate for you to do so.