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Do you take on liability as the executor of someone’s estate?

| Oct 28, 2020 | Estate Planning |

When someone you love asks you to be the executor of their estate, you may feel honored and possibly cornered as though you have no option but to say yes. There is a reason that asking someone is commonplace when deciding on an executor or administrator for an estate, so it’s important that you understand your right to decline the responsibilities involved.

There are many responsibilities that come with estate administration, as well as some liabilities and risks. Before you say yes, you need to understand the personal risks that you incur when you agree to handle someone’s estate after they die. There are a few circumstances in which you might personally suffer losses as an executor.

You could be responsible if you don’t pay all the necessary taxes

One of the first obligations you have as an executor is to pay off existing debts before you attempt to distribute assets to family members and beneficiaries of the estate. Many families have at least one person who will become frustrated and impatient about the delays in the probate process.

As executor, you need to remain patient and steadfast in your adherence to the rules. If you distribute assets from the estate under pressure only to discover that you haven’t retained enough to pay all of the tax responsibilities of the deceased person, you could be the person that the government comes to for repayment of those owed taxes.

You could be responsible for unpaid debts as well

Much like taxes, private debts and even secured debts like mortgages require repayment or refinancing as part of estate administration. In theory, if the testator was the only debtor on an account, they are the only one with liability to repay it, but that responsibility does pass on to their estate. As executor, you are in charge of the estate and serve as its representative.

If the estate liquidates or gives away assets without repaying creditors, you, as representative of the estate, could wind up in a difficult situation and possibly subject to claims by creditors.

Getting good advice and guidance early in the estate administration process and throughout each individual stage will reduce the likelihood of you encountering difficulties and incurring personal liability for taxes, debts or other financial issues from the estate.