The executor who has been tasked with handling an estate has a lot of responsibilities. They have to locate all of someone’s property, repay their creditors, file their final income tax return and distribute the remaining property to the beneficiaries of the estate.
All of that work often means that an executor receives compensation from the estate’s assets for their services. Unfortunately, some executors end up owing money instead of receiving payment after probate proceedings because of a common oversight. What mistake might lead to financial liability for you as an executor?
Improper asset distribution can come back to haunt you
You must fulfill someone’s remaining obligations before you hand out their remaining property to their beneficiaries. The estate needs to pay everything from medical bills to utilities bills.
One of your more important tasks as executor involves the notification of all relevant creditors. You have to contact known creditors individually and publish information about the estate in case you don’t know about certain creditors. You have to use estate assets to repay those creditors before you can give any property to the beneficiaries of the estate.
If any party with a valid claim against the estate can show that you distributed assets from the estate to others instead of paying them first, they could potentially hold you personally accountable for those amounts. The best means to protect yourself include careful compliance with probate law and ensuring that you repay all creditors before disbursing assets. Identifying your risks during estate administration can help you protect yourself while fulfilling your duties.