Terminology & Roles
If a person dies with a will and names someone to distribute the estate assets that person is called an Executor
If a person dies without a will a relative successfully petitions a probate court to be appointed to distribute assets that person is called an Administrator.
Either is known as Personal Representative.
Please Note: The difference is important because Nevada discriminates against out of state Administrators but not out of state Executors.
If you are named as the Executor in a will a Nevada probate court will appoint you (if the will is valid and you have not been convicted of a felony and are not crazy or underage) to be Executor no matter whether you live in Nevada or Afghanistan. But if you and your spouse live in California and your spouse dies with property in Nevada in his sole name but without a will, and even if you would inherit everything under the applicable laws, you cannot be the Administrator unless you associate a Nevada resident Co-Administrator.
The Role Of The Personal Representative
In most probates the Personal Representative collects cash for the estate, either by collecting cash from financial accounts or selling assets of the estate. (If the decedent owned a farm or other business as in individual, the Personal Representative will have the additional duty of continuing to run the business either until sale or until it is passed on to heirs, or wrapping up the business, but this is an uncommon probate scenario.)
The Personal Representative also has deal with debt claims against the estate. If a bill comes in, say for medical care of the Decedent, and the Personal Representative wants to pay it, the Personal Representative doesn't have to do anything except provide for the payment when the estate is closed. However, the Personal Representative may want to negotiate a bill, or even try to avoid paying it. Unless the Personal Representative wants to pay the bill in full, he or she should mail the claimant a "Notice to Creditors" prepared by the estate attorney and then, unless the claimant files a Creditor's Claim with the Court promptly, the claim is dismissed.
The Personal Representative also has to deal in some case with the Internal Revenue Service in the following ways:
- Beginning in 2019 most financial institutions and real estate escrow agents require a tax ID Number for the Estate before releasing funds, whether from a financial account or the sale of a house. This can be gotten by going to IRS.gov and searching or EIN Application. (EIN stands for Employee Identification Number, but this is also what you want or an estate tax ID Number.) Go online during business hours while your computer is hooked up to a printer and after a few minutes you will be able to print out a form to use with banks or real estate closings. You will need to input the Decedent's SS# and your own SS#. You will specify the application is for an estate. You will state that the estate has no employees (unless you plan to take an administrator's or executor's fee in which case you will be the single employee). You will be asked for the tax year of the estate. You should select the date of death as the beginning of the tax year as this may minimize the number of estate income tax returns you may have to file.
- Any income to the estate from the date of death until the end of the estate tax year--see above--over $600 is taxed starting at 15%. This is different from "estate taxes" placed on very large estates. For 2020 the federal estate tax exemption for an individual is $11,580,000.
- If the Decedent did not file a tax return for the complete calendar year he lived before dying, the personal representative will have to take care of that.
- A Decedent's tax return may be due for the part of the year that the Decedent lived.
In Nevada, the Court is not the IRS's enforcement agent. The Court will approve a final distribution of the estate pursuant to a Court Order that says that each Will Beneficiary or Heir must pay their share of federal taxes. However, some Personal Representatives want to take care of paying all federal tax obligation before a final distribution.
How Hard Is It To Be A Personal Representative?
This can be hard or easy depending on the number of different financial institutions involved. One person might keep money in 20 different financial institutions while another person might keep the same amount of money in just one financial institution.
The Personal Representative is not required to sell assets retail. A car can be sold to CarMax or other car dealer. Guns and coins can be sold to dealers. Clothing and furniture, in most cases, can appropriately be given to Good Will or similar charity. Valuable furniture and clothing can be placed with consignment shops or sold to dealers. If there are painting or prints on the walls of a Decedent's residence the Personal Representative should consult an art dealer or someone knowledgeable about art. (Most original paintings won't have any significant value.) Of course, nothing prevents a very dedicated Personal Representative from selling assets retail through e-bay or to individuals to obtain higher prices.
A personal representative may hire a cleaning crew and repair people to make a residence presentable for sale. Most real estate brokers can hire clean up crews and repair people if you list the property with them. The charges for the clean up and repairs will come out of the estate's money.
In an uncontested probate the Personal Representative will not face any strife. However, if Dad has dis-inherited adult son, it could happen that disinherited adult son will harass the Personal Representative or even make threats.
View the different fees that may be incurred from a personal representative or a Non-Professional Co-Administrator.
The Personal Representative is entitled to a statutory fee of 4% on the first $15,000 of the estate, 3% on the next $85,000 in value, and 2% on anything over that. For estates over $100,000 that comes out to a fee of $3,150 on the first $100,000 and 2% on anything over that.
Usually if the personal representative is an heir, they waive their fee because the fee would be subject to both federal income tax, and federal self-employment tax for social security and Medicare, if the personal representative lives in a state or county or city with an income tax to that those taxes as well. Nevada does not charge an estate tax or an inheritance tax.
Of course, a professional Administrator is only in it for the fee. And, if it is a small estate with a lot of work the professional Administrator will be successful in obtaining a fee larger than the statutory fee.
If a Nevada resident Co-Administrator is required in an uncontested probate where the non-resident Administrator (usually a major heir of the estate) is going to do all the work, the non-resident Administrator can ask a Nevada resident friend to serve as Nevada Resident Co-Administrator. Often these friends initially agree to do so as a favor or for little pay and then get worried about liability and back out. However, if you need a Nevada resident Co-Administrator it is your option to hire a friend and to make whatever financial arrangement with them you like providing that they are not paid more than the statutory personal representative fee discussed above.
Alternatively, our firm can pay a person who works in our office complex (not one of our employees) to be Nevada resident Co-Administrator. We typically pay $500 for estates under $200,000 and $1,000 for estates over $200,000. However, these people are not professionals, and have regular full-time jobs so will back out if asked to do substantive work or if disgruntled dis-inherited people start harassing them.
If the need for a Nevada resident Co-Administrator goes beyond legal formalities it is best to hire a professional Administrator. But, some of our competitors will tell an out of state Administrator that a professional Nevada resident Administrator must be hired, even if the out of state Administrator takes responsibility for all of the work of the estate. These competitor lawyers then hire what is essentially a paralegal to serve as the Nevada resident Co-Administator. The professional administrator, usually a friend of the lawyer, saves the lawyer or their staff a lot of work and the client get billed for unnecessarily high probate expenses.