DEFINITION of ‘Personal Representative’
The executor or administrator for the estate of a deceased person. A Personal Representative is a fiduciary of the beneficiaries of the estate, which imposes upon him or her the duty to act in good faith, and in the best interests of the beneficiaries. Where the deceased person has left a Will, the law requires the Personal Representative to implicitly follow the terms of the Will.
The term “Personal Representative” may also refer to a person who is given authority to make decisions over others. For example, an individual who has been authorized to act on behalf of a person to make health care related decisions because the latter is incapacitated or otherwise incapable of exercising their rights.
BREAKING DOWN ‘Personal Representative’
A Personal Representative has to perform a number of tasks when acting as the executor of a deceased person’s estate, including:
- arranging for the funeral or service for the deceased person;
- notifying those entitled to a share of the estate property;
- determining the value of all property and debts of the deceased as at the date of death;
- arranging for the management and security of estate property;
- arranging for the payments of all debts and expenses owed by the deceased and the estate;
- assessing income-tax and estate tax liabilities;
- preparing and filing all income-tax and estate tax returns;
- distributing estate property according to the Will.
While a Personal Representative is generally a close relative or friend of the deceased person, there is a significant amount of work involved in administering the estate. The Personal Representative is therefore entitled to reasonable compensation in performing these duties.
There is a potential liability imposed on a Personal Representative, as he or she may be personally liable to the beneficiaries to the full extent of his or her personal assets if the beneficiaries claim damages for fraud or mismanagement.