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Understanding the fiduciary duty of a personal representative

When a resident of Texas dies, the property of the decedent must be distributed to the decedent’s heirs and beneficiaries according to state law. If the person dies with a will, the person who oversees the collection and distribution of the decedent’s estate is called an executor. If a person dies without a will, the state will appoint a person called an administrator to oversee the liquidation of the decedent’s estate. In both cases, the person who is put in charge of handling the estate is called a “personal representative,” and that person owes a fiduciary duty to the estate and to the decedent’s heirs and beneficiaries. But, what, exactly, is entailed in that fiduciary duty?

A person who owes another person or entity a fiduciary duty is required to act in a trustworthy fashion. The precise extent of the fiduciary duty depends upon the relationship. A fiduciary duty with respect to a decedent’s estate means that the personal representative must collect and distribute the decedent’s assets, pay creditors and applicable taxes. The personal representative cannot make false statements or conceal assets or financial records from heirs and beneficiaries.

The exact nature of the fiduciary relationship depends upon the size and complexity of the estate. If the decedent died leaving few assets, the personal representative may be required to locate and distribute only a few assets.

In more complex estates, the personal representative may be required to engage in a far-reaching search for assets and heirs. Personal representatives are occasionally required to manage one or more businesses owned by the decedent. The personal representative must exercise due care in identifying and locating beneficiaries and heirs. The personal representative generally operates alone, subject to periodic reports to the probate court.

If the decedent died without leaving a will, the personal representative is required to distribute the estate according to Texas’ laws of intestate succession. If the decedent left a will, the personal representative must ensure that the assets are distributed according to the directions contained in the will.

In all such dealings, the personal administrator must deal honestly with everyone who has an interest in the estate, including heirs, creditors, financial institutions and taxing authorities. If a personal representative chooses to engage in fraud or self-dealing, he or she may be deemed to have violated one or more fiduciary duties and may be liable to heirs or beneficiaries for any losses.