Written by P. Mark Accettura and Samuel A. Hurwitz

INTRODUCTION

Chapter Two: “Getting Organized” discusses how to get started, documents to locate, items to save, and whom to contact. Key among those duties is to identify all of the assets in which your late spouse had an ownership interest. The Asset Inventory with Values Worksheet discussed in Chapter Two is intended to help you catalog your late spouse’s assets, identify how each is owned, and approximate their value. How your late spouse’s assets were owned will determine how they pass at death. The methods of passage, and your responsibilities as surviving spouse and fiduciary, are the subject of this chapter.

HOW DO YOU KNOW WHEN PROBATE IS REQUIRED?

A banker, stock broker, or real estate agent will advise you that since a particular account, stock, or parcel of real estate is in your late spouse’s name alone, they are going to need evidence of your authority to act in your late spouse’s place and stead. They will not accept a copy of your late spouse’s Will since, as they may tell you, only the probate court has the authority to interpret the terms of a Will. Instead, they will need “letters of authority” or other decree of the probate court appointing you as your spouse’s “personal representative.” The probate court will not contact you. Obtaining court authority requires that you submit to the court’s jurisdiction by filing a petition with the court.

For our purposes, the term “personal representative” is defined as follow:

Personal Representative: A person, or committee of individuals, or sometimes a corporate fiduciary like a bank, appointed by the probate court, to administer the probate estate of the decedent. Sometimes called an “executor” or “executrix.” The person named in the decedent’s Will has first priority to be appointed as personal representative. If the individual named in the Will is unable or unwilling to act as personal representative, or the decedent died without a Will, the surviving spouse has first priority.

Deserved or not, probate has gained the reputation of being time consuming and costly. In reality, each probate estate is different. Your experience will depend on the size of the estate, the quality of your legal representation, the cooperation of your family, and if different, your late spouse’s family.

Assets owned in trust pass according to the terms of the trust document. No transfer of title takes place, since the trust continues to own property both before and after the death of the trust creator (“grantor”). The grantor’s death makes the trust irrevocable since the grantor was the only person with the power to amend or revoke the trust. Most revocable trusts provide that the grantor shall act as initial trustee until his or her death. A successor trustee, appointed by the grantor in the trust instrument, takes over the management of trust assets after the grantor’s death.

FIDUCIARY RESPONSIBILITY

It is possible, in fact likely, that you will act as your late spouse’s personal representative and successor trustee. When acting as personal representative or trustee, you are considered a “fiduciary” under state law. Being a fiduciary means that you have a legal obligation to exercise a high standard of care in the management and distribution of your late spouse’s property.

It is important that you fully understand and fulfill your fiduciary responsibilities. If you breach any such duty, you could be personally liable to the estate or trust, as well as heirs and beneficiaries for damages.

The probate court could also remove you as fiduciary in favor of another family member, or officer of the court. While the risk of personal liability and removal are extremely low for traditional families, it could be quite high if your family has a history of hostility and conflict.

You should be especially diligent in your duties if your late spouse had children not of the marriage, as these relationships can become strained after your spouse’s death.

Although they vary from state to state, some version of the following fiduciary responsibilities apply in all fifty states. You must:

1. Exercise reasonable care in carrying out your duties,
2. Exercise loyalty (i.e., you must act in the best interest of the estate or trust and not for your own benefit),
3. Not commingle estate and trust property with your own property,
4. Act as a prudent investor concerning estate and trust assets,
5. Keep beneficiaries reasonably informed,
6. Provide beneficiaries with accurate and timely accounts of estate and trust assets and income.
7. Report and pay income and estate tax, and
8. Distribute estate and trust assets in strict compliance with state law or the terms of the trust document.