Duties of a Personal Representative in Maryland
If you have been named as the personal representative in a family member or loved one's will, you may be experiencing a range of emotions and have a lot of questions. We understand that it is normal to feel overwhelmed, and our goal is to do everything possible to make this process go smoothly for you and your family. The orderly conclusion of an individual’s affairs is a time-consuming process, but one in which we have a great deal of experience.
At the Law Offices of Merrill, Cruttenden & Collinson, P.A., we want you to understand your duties of a personal representative and the process so that you have knowledge of what will be happening in the estate. We can help you take care of the documents due to be filed with the Register of Wills and the comptroller and assist you in administering the disposition of the investment and real property assets of the estate, paying bills, collecting income, and communicating with beneficiaries.
Steps in the Probate Administration Process
The first step in the process is the appointment as Personal Representative of the estate by the Register of Wills. You will receive a Letter of Administration from the Register. This letter is the official beginning of the existence of the probate estate and simply notifies interested persons of the initiation of the probate process.
There are two main items that a Personal Representative needs to file with the Register of Wills within 60 days of appointment:
- Inventory — The inventory is a report sent to the Register of Wills that includes a list of all assets titled in the decedent’s name alone. These assets are known as the "probate estate" and pass according to the terms of the Will. The inventory must accurately identify those assets and supply their values as of the date of death, therefore the real property must be appraised as well as the tangible personal property.
- Information report — The information report is a document also sent to the Register of Wills, but this report identifies assets that will pass to someone other than by the terms of the Will. These assets are called "nonprobate assets." Examples of these types of assets are life insurance policies, jointly held property (such as bank accounts or real estate), retirement benefits and property held in a trust that existed prior to the date of death. These assets may be subject to inheritance tax, but will pass outside the terms of the Will.
Additional tax-related deadlines and reports that a Personal Representative should be aware of include:
- Federal estate tax return — If the estate exceeds five million dollars, the estate must file a federal estate tax return with the IRS within nine months of death. Sometimes it will be important to file this return even if the estate is less than five million dollars to preserve the decedent's unused estate tax exemption by the surviving spouse.
- Maryland estate tax return — If the estate exceeds $1 million, the estate must file a Maryland estate tax return with the Comptroller of Maryland nine months after the date of death.
- Decedent’s individual income tax returns — We will work with you to furnish the information necessary to prepare the decedent’s final federal and state individual income tax returns, which are due on April 15th following the year of death.
- Estate’s fiduciary income tax returns — The estate is a separate income taxpayer, distinct from the decedent, and the estate’s first taxable year began on the date of death. The estate’s income and deduction situation should be analyzed to determine the optimal taxable year for the estate, based on a variety of factors. It will be necessary to prepare and file the estate’s fiduciary income tax returns, which are due three and one half months after the end of the estate’s taxable year. Depending upon how long the estate is open, the estate may file more than one fiduciary income tax return.
We will work with you and an accountant to provide the information needed to prepare these returns.
Creditors' Claims and Will Contests
The Personal Representative is required to notify creditors of the decedent’s death, and the time within which claims must be presented. Creditors must file their claims against the estate within six months following the date of death. The claim can either be filed with the Register of Wills or with the Personal Representative. Claims not presented properly within the specified time may be disallowed and not paid by the estate.
There is also a similar six-month period, which runs from the date the Personal Representative is appointed, during which a petition to contest the will (and codicil, if any) may be filed. Once this time period has expired, the Will may not be challenged.
Because of these two waiting periods, the estate typically will not make any distributions of gifts under the Will until six months after the appointment of the Personal Representative.
The estate must report to the Register complete information regarding all receipts and disbursements until the probate estate is completely distributed. This is the purpose of the administration account. Depending upon how long we must retain assets in the estate (either waiting for a closing letter from the IRS or for other issues to be resolved), the estate may be required to file more than one administrative account. Administration accounts are due every six months after the first administrative account while an estate is still in existence.
Personal Representative’s Compensation — Personal Representatives are entitled to compensation for their services in accordance with the provisions of the Estates and Trusts Article of the Annotated code of Maryland, the law which governs the administration of probate estates. Unless the signed consent of all interested persons are first obtained, we generally petition the Orphan’s Court for payment of commissions when distributions are made to the residuary beneficiaries. As you may know, the law specifies that Personal Representatives commissions are 9 percent of the first $20,000 of the probate estate, and 3.6 percent of the balance of the probate estate.
Typically, the administration of an estate concludes shortly after receipt of a closing letter from the Maryland Comptroller’s office, which indicates either that the Maryland estate tax return has been accepted as filed, or the audit of the return has been successfully completed.
Contact Annapolis Probate Attorneys at Merrill, Cruttenden & Collinson, P.A.
Our goal is to make the administration of the estate as painless as possible for you and your family. If you have been named as a personal representative in Maryland, we can answer your questions and help you comply with your duties for the estate. Please contact our Maryland probate administration law firm