Serving as a Personal Representative: What You Need to Know

I recently taught a class with the same title as this article. It was inspired by what I learned and experienced personally as the personal representative (PR) of my late brother’s estate.

Below are some key take-aways:

PR Definition- A personal representative (PR) is a person or financial institution legally appointed to settle a deceased person’s estate via probate. PRs can be named in a will or appointed by the court. Some states (FL) use the PR term and others (NY) use the words executor (with a will) and administrator (without a will). The role and tasks performed are the same.

PR Importance- A PR is granted legal authority and fiduciary responsibility to act in the estate’s best interest. There can be legal and financial consequences if duties are mishandled. A PR’s actions can directly impact the lives of estate beneficiaries for many years.

The Probate Process- Probate is the court-supervised process of managing a deceased person’s estate (i.e., assets and debts). It involves validating the will (if one exists), gathering and valuing assets, paying debts and taxes, and distributing remaining assets to heirs.

Probate Avoidance Strategies- To avoid having assets subject to probate, people can use trusts, payable on death (PoD) designations on bank accounts, transfer on death (ToD) designations on brokerage accounts, beneficiary designations on life insurance and retirement savings accounts, and assets with joint tenancy with right of survivorship (JTWROS).

Legal Assistance- When serving as a PR, it is always best to consult an attorney in the relevant jurisdiction (i.e., where the deceased person lived). An attorney can answer a PR’s questions and handle court-related process steps and other tasks (e.g., obtaining an ETIN for the estate bank account and notifying creditors).

Small Estates- Most states have a simplified probate process for small estates. The definition of a small estate varies per state (e.g. $75,000 in FL and $50,000 in NY). Qualification for small estate procedures generally depends on the total value of probate assets rather than the deceased’s overall wealth. Wealthy people could use one or more of the probate avoidance strategies listed above to keep their probate assets below their state small estate cap.

PR Appointment Letter- An appointment letter (a.k.a., Letter Testamentary) is a formal document issued by a probate court, confirming the appointment of an individual (or entity) as the PR of a deceased person's estate. This letter serves as proof of the representative's authority to act on behalf of the estate (e.g., set up an estate bank account, pay debts, and distribute property).

Gap Time- It takes time for a PR to be issued an appointment letter. In the meantime, someone needs to pay up quickly for a funeral or cremation and then get reimbursed by the estate. Ditto for necessary expenses to maintain property such as electricity, water, property tax, and lawn care.

Tax Implications- PRs are entitled to compensation in most states, generally a percentage of the estate’s value as defined by state law. PR compensation is taxable as ordinary income on IRS Form 1040, Schedule 1. When PRs are also a beneficiary of the deceased’s estate, many waive their PR compensation and inherit nontaxable assets as a beneficiary instead.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

   

Take-Aways From AFCPE Symposium Recordings

 

One of the great features of the annual Association for Financial Counseling and Planning Education (AFCPE) Symposium is that AFCPE records all of the breakout sessions and makes them available to attendees online for a year. Gone are the days when you needed to choose one session from among multiple topics of interest and miss hearing the others.

During the past nine months, when I had time, I slowly made my way through parts of the 2024 Symposium that I missed and was interested in. This post provides a very eclectic summary of my key take-aways from the “rest of the AFCPE Symposium.”

Sequence of Returns- This term refers to the order of investment returns in retirement. In other words, good years first/bad years last or bad years first/good years last. It is not the average return throughout retirement that matters but, rather, the order in which returns arrive.

Sequence of Returns Risk- This is the danger that poor investment returns early in retirement, combined with withdrawals for living expenses, will reduce a portfolio’s value, increasing the risk of running out of money sooner, even if average returns are acceptable. Most sequence of returns risk happens during the first half of retirement.

Buffer Assets- These are assets outside retirement accounts that can pay expenses during market downturns to shield retirees from having to make withdrawals from equity assets. Examples include high-yield savings accounts and money market funds, home equity lines of credit (HELOCS), cash value life insurance, and reverse mortgages.

Financial Education Courses- The “gold standard” for high school financial education is at least a full semester stand-alone course and, in 2023, eight states passed a financial education requirement. As of July 2025, 29 states guarantee a personal finance course. Most state mandates are unfunded. Why the momentum? Great advocacy work, organizational support, and research findings showing the effectiveness of, and positive impacts from, financial education.

The American Dream- Research findings show the term “American Dream” is highly individualized  but perceived by most people as owning a home, having a comfortable retirement, and an expectation that your children will have a better life than you. White, Asian, and higher-income Americans are more likely than others to say they achieved the American Dream.

Reinventing Yourself- A panel of speakers discussed the process of transitioning to a new career within the financial education and counseling space. The benefit of doing this is that “you know things” and can transfer knowledge and skills honed during a prior career. In other words, you don’t have to start at the bottom. Some people also get paid more when they switch careers. A key to success is trying to differentiate yourself through skills, credentials, and experiences.

Next month, I look forward to attending the 2025 AFCPE Symposium. I’ll be teaching a concurrent session myself and once again learning from, and networking with, professional colleagues and sharing best practices in financial education.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

 

Common Mistakes With Retirement Savings Plans

 

People make mistakes with retirement savings plans for a number of reasons including lack of financial knowledge, procrastination, and underestimating future expenses. Many also don’t review or adjust their plans regularly, leading to missed opportunities and inadequate savings.

Below is a list of common mistakes made with retirement savings plans. If you learn what they are, you can take steps to avoid them.

Not Enrolling Early- Many people delay signing up for a workplace retirement savings plan, missing out on significant investment growth. Even small contributions made early in someone’s career can grow significantly over time due to compound interest.

Not Contributing Enough to Get the Full Employer Match- Many employers match a portion of employees’ contributions if employees save first. Failing to contribute at least enough to earn the full employer match is like leaving free money on a table and walking away.

Cashing Out When Changing Jobs- Some people cash out their 401(k) when they switch jobs and immediately spend the money. By doing so, they incur taxes and penalties and, more significantly, forgo long-term growth potential.

Not Increasing Contributions Over Time- As income rises, many people don’t adjust their retirement plan contributions. This is another missed opportunity. Increasing savings as you earn more helps keep retirement savings on track.

Choosing Investments Without Understanding Them- People sometimes select retirement account investments blindly or based on what their coworkers select instead of reviewing past performance, and their individual risk tolerance and goals.

Being Too Conservative Too Early- Younger investors sometimes avoid stocks due to fear, opting for bonds or cash equivalent assets. This limits potential growth early on when they can afford to take more risk because time is on their side.

Being Too Aggressive Too Late- Older investors close to retirement sometimes keep overly aggressive portfolios (i.e., a high percentage of stock), thereby exposing them to high market risk right before they need to withdraw funds to pay living expenses in later life.

Not Naming or Updating Beneficiaries- If you do not name a retirement account beneficiary—or fail to update it after life changes (like marriage or divorce)—your money might not go where you intended. It is also smart to name a contingent (“Plan B”) beneficiary.

Thinking You Have Plenty of Time- The biggest retirement plan mistake is procrastination. Many people assume they’ll save "later," and forgo the awesome power of compound interest for decades. For every decade of delay, the amount needed to save to reach a goal approximately triples.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.