Agreeing to serve as the executor of someone’s estate comes with a lot of responsibility. You will have to manage everything from securing the property to hearings in probate court. Not only do you have to settle the decedent’s accounts, but you also have to hand out their property to their beneficiaries.
However, you may be ready to do that demanding work to preserve the legacy of someone that mattered to you. You may have agreed years ago to take on this important role. What you may not have known at the time you accepted your role is that it comes with certain risks as well.
You could have some personal financial liability for mistakes that you make during the estate administration process. When could you suffer a financial loss because of your role as executor?
When you improperly distribute estate assets
You need to notify the probate courts about the estates, provide them with an inventory of assets and give them a copy of the estate plan. You also have an obligation to notify creditors and to file a final tax return for the deceased individual.
You must repay the financial obligations of the testator before you distribute any property to beneficiaries of the estate. Otherwise, the creditors or taxing authorities could come after you for those unpaid debts.
If you distribute assets from the estate before paying creditors, even if their claims would completely consume the assets that someone left behind, you could have financial and legal responsibility for those unpaid taxes or private debts. Learning about the risks of estate administration can help you avoid a big mistake.