Lincoln & Wenk, PLLC

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Do you have any personal risk as an executor of an estate?

| Jan 12, 2021 | Wills, Trusts, And Estate Planning

There can be a lot of work involved in handling someone’s estate. There are often months of hard work required that can range from settling accounts to cleaning out a house. You may have to go to probate court several times and wait months before you can sell or distribute assets.

Testators frequently leave some form of compensation in their estate plan for the person carrying out their last wishes after they die. The estate also helps protect the executor by covering the cost of legal representation during the estate administration in most cases.

Getting adequate help from the earliest stages of settling an estate can help protect executors from making mistakes. Failing to repay creditors or file taxes are among some of the more substantial oversights an executor might commit. Do you have any personal liability if you make that kind of mistake while serving as the executor of a loved one’s estate?

You could be on the hook for taxes and debts that go unpaid

One of your first responsibilities as executor is to review the finances of the deceased and determine what debts they have. You will have to pay off accounts that require closure and settlement. Unless there is a co-signer on any of the accounts, responsibility for the debts ends when you completely deplete the assets owned by the deceased party.

In other words, if someone doesn’t leave behind enough assets to pay off all of their credit card bills or medical debt, you aren’t responsible for that. However, if there are enough assets but you don’t pay the necessary parties, you could end up responsible for those oversights.

Don’t distribute assets without paying creditors

You generally have an obligation as executor to pay all outstanding debt and taxes owed by the deceased before you distribute any assets to beneficiaries of the estate.

If you overlook repaying a certain creditor or if you fail to pay taxes owed by the deceased and distribute property to beneficiaries or sell assets like a home to distribute its value among heirs, creditors may bring a claim against you for failing to pay them first.

That personal risk that you incur is one compelling reason to get advice and assistance with the administration of an estate to ensure compliance and minimize personal liability.

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