The personal representative of a Pennsylvania estate, also known as an executor or administrator, has the legal authority to manage the estate assets. But with this authority also comes the responsibility to preserve the value of the assets for the beneficiaries. Estate representatives have a fiduciary duty to the beneficiaries to ensure that the assets are protected and can be held responsible for depreciation in asset values.
How should an executor manage estate assets?
Clients often ask me what they should do with the estate’s liquid assets during the time of administration but before distribution. For example, should the representative immediately liquidate all of the assets? Should cash be reinvested during a potentially lengthy probate process?
A personal representative can be held personally liable for any diminution of the estate’s liquid funds. This means that if the funds are invested and a loss occurs, or otherwise mishandled, the estate’s beneficiaries or creditors can pursue the personal representative’s own assets through a surcharge action. This can be true even if the deceased left behind stocks and the representative failed to sell the stocks before a decline in market value.
Should the estate’s cash be invested by the personal representative?
Section 3316 of the Pennsylvania Estates and Fiduciary Code states that a personal representative may invest the funds of the estate but shall have no duty to do so. If the personal representative decides to invest the funds, the law heavily restricts the types of assets which may be invested unless the deceased’s Will directs otherwise. But even where the Will provides authority to invest in any type of asset, the representative does so at his or her own risk.
My general advice to personal representatives is that the representative gains nothing if the investment is successful but can be held responsible for any loss. For this reason, it is highly recommended to obtain the advice of a competent financial advisor. Financial advisors can help manage tax implications and assist with selection of appropriate investments.
As a probate attorney to estate executors, I help settle estates efficiently and reduce stress. If you know someone faced with a probate process or roadblocks to a property sale, please have them contact us for a free evaluation at:
Phone: (215) 918-4242
If you are not quite ready for a consultation, download our probate handbook HERE. We’ll send you helpful probate guides and resources so you know how to handle the estate.