Hey there, Legal Tea Listeners –This is your host, Jenny Rozelle! Today’s episode is a “cautionary tale” topic/type of episode and usually on these episodes, we go into a real-life, real-client story that I, or my office, has worked on – that usually is a messy-something that happened, and that you should learn from. Well, today is a topic that was inspired by a friend that had texted me recently asking about the process of getting someone appointed as Executor – and long story short, she had shared that her partner’s grandparent has passed away and there was already a lot of drama around 1) who should be appointed as the executor and 2) what happens if not everyone agrees who should be appointed? So, all of that reminded me of a case we were involved in a year or so ago – where my office assisted with probate (which is the court venue to get someone appointed as Executor).
Now, it is important to understand that probate is the Court process that sometimes, depending on estate planning documents and assets, happens after someone passes away. Sometimes, people think that when you have a Will, that avoids probate. It does not. So, just know that probate may happen if 1) there is no Will or 2) there is a Will and we’re relying on that Will to get an asset from the deceased person to the beneficiaries. Through the Probate Process, someone gets appointed as the Executor. Indiana, I suppose, likes to be different because when I say Executor, this role is technically-speaking in Indiana called a Personal Representative. They are the ones in charge of the Estate – hiring an Estate attorney, consolidating assets, administering the Estate, distributing to the beneficiaries, etc. So, here, you can sort of interchange Executor and Personal Representative.
So, the “cautionary tale” episode is about a family that was NOT fighting about the money and who-gets-what, but instead was fighting about WHO was in control – that is, who should be the Personal Representative/Executor of their mother’s Estate. It all began when one of the children met with our office, engaged our firm to represent them as the Personal Representative, and we got to work. All of a sudden, we got a phone call from one of the other children in a RAGE, I tell you. That child was saying “to stop all work, she was the one in control” blah blah blah.
You see, the kicker with this case is that their deceased mother did not have a Will. So when you don’t have a Will, really anyone can petition to be appointed as the Personal Representative. Actually, we’re going to talk a little about that in a bit – who should be appointed as the Personal Representative, according to the Indiana Code. So hold tight on that. Anyway, so we pushed forward with representation, petitioned local Court to get our client appointed as the Personal Representative, and the Court ordered it. So, officially – our client was the Personal Representative of their mother’s Estate. That’s all fine and dandy, until we got another call from the raging child.
Most of the calls from this child were, to be honest and frank, borderline inappropriate – she threatened my team, she was screaming, etc. So, I instructed my team that when she called, to listen, but to let things bounce off of them. Put a note in our database, email the attorneys, and move on. So, one of these calls, she said something to one of the team members (and they subsequently relayed to us) that prompted me to think, “What does she mean?!” Specifically, it prompted me to pull up the Court records and I discovered that she hired an attorney herself, they opened an entirely separate Estate case for the mother, and incorrectly spelled the mother’s name (so that’s why the Court didn’t put two-and-two together). I can’t make this up, people…
At this point, we’ve got two attorneys (us) and this child’s attorney … as well as two Estate cases with the Court. To no one’s surprise, the Court called a hearing basically to say, “What in the heck is going on?!” Rightfully so, I may add. It felt like a circus. It was after meeting with the clients, but before the hearing, that both sides started airing out their dirty laundry. It was uncovered that one side had criminal charges on their record, specifically drug-related charges, and the other side had creditor issues on their record. Both sides’ attorneys started wondering, “Okay – maybe NONE of these people should actually be the Personal Representative.” So, both sides’ attorneys recommended to their respective clients – “What if we appoint a third party, non-family member professional to serve as the Personal Representative?”
Would you even believe me if I said the sides would not even agree to that? To this day, I am 100% convinced that they kept fighting because it was about WINNING. Whoever the Personal Representative is … WON. THEY were the ones that are in control. I’m not sure why they thought that because serving as a Personal Representative is no small feat … is not an easy job … and it takes a lot of time and energy. But here we are…
What is equally as crazy as all this that I’ve rambled about is this Estate was fairly small. The Estate was a house worth about $75,000. That is it. So, from a mile away, I can see that this Estate is going to get consumed by legal fees. ALL because they can’t flippin’ agree on who should be the Personal Representative.
So, now that you hear this wonky story, let’s talk a little bit about 1) who, according to the Indiana Code, SHOULD be appointed as the Personal Representative; and 2) what, sort of, qualifications should the Personal Representatives possess in order to be appointed.
First, we’ll chat about the “WHO” should be the Personal Representative. Interestingly, the Indiana Code provides a pecking order for us – and I’m going to take a wild guess that most states have similar pecking orders within their state statutes. Anyway, Indiana says that the following individuals should be the Personal Representative of someone’s Estate in the FOLLOWING order (so yes, the higher on the list, the more likely a Judge will agree with your appointment):
1. To the Executor/Personal Representative designated in a Will; THEN
2. To the surviving spouse who is also a beneficiary in the Will; THEN
3. To a beneficiary in the Will; THEN
4. To someone that the surviving spouse nominates; THEN
5. To an heir (different than a beneficiary) – A heir is someone who would receive a share of the person’s Estate under intestate succession (oftentimes, a direct family member) OR to someone that an heir nominates; THEN
6. “Any other qualified person.”
So, in this cautionary tale case, they ended up, after a lot of court back-and-forth, decided that an attorney should serve in the Personal Rep/Executor role as a professional, unbiased third party. And honestly, that’s exactly what should have happened.
Second, let’s chat about what, sort of, qualifications should the Personal Representative possess in order to be eligible for appointment. Again, the Indiana Code gives us express direction on who is eligible and who is NOT. Let’s go through them:
1. A Personal Representative must be at least 18 years of age – that is, 18 years or older.
2. A Personal Representative cannot be incapacitated, unless the incapacity is merely physical – however, if it’s cognitive incapacity, for example, can’t have that.
3. A Personal Representative cannot be a convicted felon.
4. A Personal Representative if it’s a corporation, must be authorized to act as a fiduciary within the state.
5. Lastly, a Personal Representative will not be appointed if the Court finds them unsuitable.
I like the last one – nice little catch-all, right? Again, anchoring back to this cautionary tale case, the Court found the originally-proposed Personal Representatives were unsuitable – due to the drug charges, due to the creditor issues, etc. So, yeah.
Oh, and even beyond this current cautionary tale case I’m talking about here, we once had a case where the proposed Personal Representative had creditor issues, yet no one opposed to this person serving as the one in charge. Though, the Judge called us in and said, “Nope – sorry. Not having them as the Estate representative. They have creditor issues.” The Court takes this appointment very, very seriously – as they should! When you’re appointed in this role, you’re held to a very high standard called a fiduciary standard. You have to always, always, always work in the absolute best interests of the beneficiaries. The Court puts an immense amount of trust in this person to fulfill the duties. Along these lines, there are two types of Estate administration through the Court – supervised and unsupervised.
Many Estates fall in the unsupervised category meaning that the Court, once they appoint the Personal Representative, is not really breathing down your neck. The Court puts lots of trust in the attorney that is representing the Personal Representative to make sure they do their job completely, accurately, and in the best interests of the beneficiaries. However, some Estates fall in the supervised category meaning, the general rule of thumb is that the Court must approve pretty much everything before you do it. Many Estate litigation cases fall in this category, or if all the beneficiaries do not consent to the proposed Personal Representative, the Court will set it as a supervised case.
Of course, in supervised land, the attorneys work dramatically increases because, again, we have to prepare Petitions, Motions, etc. asking the Court to do things before the Personal Representative does them. Conversely, in unsupervised land, we don’t. Most things happen “off” the record, so to speak. So, going back to the case that this cautionary tale is about – this has been set as supervised because obviously the parties, the beneficiaries are not agreeable to “who” should serve as Personal Representative. The more you know, right?!
Alrighty … let’s wrap up this episode. Next week, we are back to the current events/current trends topic -- something I’ve seen or run across that I think would be interesting on here. During that episode, we’re going to be talking about the movie, The Blind Side, and what appears to be some drama, a court case brewing between the real-life people that inspired that movie. It’s getting juicy, I tell you! So, until then, Legal Tea Listeners…be well and talk soon!