FINE PRINT

Probate administrators: Boss or employee?

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Does this sound familiar? Mom and dad pass away. Years later the kids decide to probate their parents’ estates. One sibling is appointed as the administrator of the estates and then lords it over the rest of the family. Wielding this newfound power, they use the estate’s assets as a piggy bank and act like they get to decide who gets what, all the while using their authority as an implicit threat that the rest of the family better be nice to the administrator or risk getting cut out of the inheritance.

Is the administrator really the boss? Can they use an estate’s assets for personal use? Do they have the final say about how to slice up the estate? No. Not at all. In fact, the opposite is true. Administrators are servants of the estate, and personally liable for not acting in the estate’s best interests. In short, it’s not a position of power; it’s a position of trust.

Now that we’ve exploded one of the most common misconceptions that I run into, let’s talk about who can be an administrator, what they do, and what happens if they don’t live up to the lofty responsibilities imposed upon administrators.

Who can be an administrator? Anyone. Well, almost anyone. The person must be an adult of sound mind who ideally resides in the Commonwealth.

Notice that I didn’t say that the administrator needs to be part of the family. That’s because there’s no such requirement. It just happens that most of the time a family member will serve as administrator.

But sometimes having an outsider handle the probate is best. One example is a contentious probate where a neutral person will be immune to family politics and better able to make hard calls. And the same is true if the estate is especially large and complex. This kind of estate can benefit from using a sophisticated administrator who understands how to handle the issues unique to a complex estate.

Moving to question two, what does an administrator do? Dozens of things. But generally speaking, an administrator’s duties fall into six buckets.

First, they figure out who might have an interest in the estate. This group includes potential heirs, next of kin, and creditors—i.e., people that the estate owes money to.

Second, they determine what the estate owns and owes. Assets will include cars, land, bank accounts, retirement accounts, life-insurance policies, and so on. Debts will mostly involve car loans and mortgages. But don’t be surprised if people pop up with informal IOUs and the occasional lawsuit.

Third, if the estate owns any property, then the administrator may have the property appraised. An appraisal can be especially important if the estate will distribute cash to people rather than gifting each piece of property directly to heirs.

Fourth, the administrator will work with an attorney to navigate the formal probate process. This process starts with an application asking the court to formally appoint the administrator. Shortly after, the administrator will file a notice of the probate proceedings in the Saipan Tribune or Marianas Variety. Weeks or months after that, the administrator will submit an inventory of the estate to the court followed by a petition for final distribution. Throughout, the administrator will attend multiple court hearings.

Fifth, while the probate proceedings wind through court, the administrator must manage the estate’s assets. For example, the administrator may need to pay taxes, mortgage payments, and invest the rest. In so doing, the administrator has what’s known as a fiduciary duty to manage the assets prudently. In other words, the administrator must act in the estate’s best interest, not their own. Anything less and the administrator is in hot water under the law.

Sixth, the administrator must keep detailed and thorough records of the estate’s assets and what happens to them during the probate process. For instance, the administrator may need to set up separate bank accounts to hold the estate’s assets and investments until the probate wraps up. Under no circumstances should the administrator place the estate’s assets in someone else’s accounts. Estate assets must be kept separate and identifiable.

What happens if an administrator doesn’t act properly? Then an interested party (i.e., an heir or creditor) can ask the court to remove the administrator. For example, an administrator may be removed if they act with bias or favoritism, neglect their duties, miss court deadlines, unreasonably delay the probate process, embezzle funds, destroys assets, use estate funds for personal benefit, or misbehave in some other important way.

But note: A little friction between the administrator and heirs is not enough to remove an administrator. Removal is reserved for serious misbehavior.

Hopefully this article has simplified the probate process for you. But if you’re still uncertain or have questions not covered here, speak with an attorney about your situation. And do it soon because legal problems seldom age well.

This column is for informational purposes only and is not intended to be taken as legal advice. For your specific case, consult a lawyer.

Jordan Sundell | Author
Jordan Sundell is a lawyer primarily practicing business, real-estate, estate-planning, and asset-protection law. He formerly worked for the CNMI Supreme Court and Bridge Capital and is now general counsel for several real-estate companies, including JZ Group. His columns—focused mainly on real estate, small business, and estate planning—are published every other Tuesday. Be sure to like the Fine Print on Facebook! Contact Sundell via this newspaper at editor@saipantribune.com or 235-6397/235-2440.
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