BUSINESS Law  101 / Marshaling assets and debts

By Albert L. Kelley

 

After the Petition for Formal Administration of Probate, death certificate and will, if there is one, have been filed with the Court, the Judge will sign an Order Appointing the Personal Representative and the Letters of Administration. Until these documents are signed, the Personal Representative has very little authority to act. If they are named in the will, the Personal Representative may make initial funeral arrangements, but that is about all. Once the Order and Letters are received the Personal Representative starts to work. They need to keep a certified copy of these forms in a file for easy reference. Many agencies such as banks will require these documents before providing the Personal Representative with any information.

One of the first activities the personal representative must do is obtain a Federal Employer Identification Number (FEIN). This can be done online at https://www.irs.gov/businesses/small-businesses-self-employed/apply-for-an-employer-identification-number-ein-online. This is the same form used by businesses, however, on the application, the personal representative will specify that it is for an estate. With the Order, the Letters and the EIN, the Personal Representative should visit the decedent’s bank and transfer the funds to an estate account either at that bank or another bank. The account will be necessary to pay any claims or other debts.

The next action is to gather all of the assets and debts of the estate. This can be more daunting than it sounds. In some cases, the personal representative may have to be more of a detective to find things. While some assets are easily located, others must be found using a little investigation. Is there a safe deposit box? Are there any insurance policies? Did the decedent own any stocks or bonds? You may need to make several phone calls to see if any of the policies you found are still active. There also may be real estate that the decedent owns that must be found. This may require looking into the decedent’s past and researching those places they have lived previously, going through tax records, court records, etc. It may require looking through their social media sites, looking through their computer files. In one probate case I handled, we pulled over 20 boxes of documents out of the decedents home and had to read every document in those boxes. Clues in documents can lead you to find assets that may not be readily located. They also can lead you to located debts. Debts are as important as the assets. The Personal Representative must locate all debts that can be readily located. Some of these are easy. If the Personal representative reviews the decedents’ mail over the course of a month, most debts will come through. But not all. Some bills may take a few months to arrive. But, often these can be learned by a little research. Was the decedent in the hospital before they died? If so you can expect medical bills, including physicians and ambulance bills. Look through the decedent’s wallet. Are there credit cards? Membership cards? Look through their bank statements and see if there are any recurring payments. The Personal Representative stands in the shoes of the decedent and has an obligation to learn all of the decedent’s financial history. I will discuss why in the next column.

Al Kelley is a Florida business law attorney located in Key West and previously taught business law, personnel law and labor law at St. Leo University. He is also the author of 4 law books: (“Basics of Business Law” “Basics of Florida’s Small Claims Court”, “Basics of Florida’s Landlord/Tenant Law” and “Basics of Starting a Florida Business” (Absolutely Amazing e-Books)). This article is being offered as a public service and is not intended to provide specific legal advice. If you have any questions about legal issues, you should confer with a licensed Florida attorney.

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