Estate administration can take months or even more than a year. The more property and debts someone had and the more complicated their financial circumstances were, the longer it can take to settle everything after they die. Spending a lot of your time and mental energy on estate administration is far from the only risk you assume when you accept the role.
As the executor of an estate, you are the one who must repay creditors, file taxes and distribute property to beneficiaries named in the estate plan. Responsibility always comes with some amount of risk. What liabilities do you assume when you agree to serve as the executor for someone’s estate?
You can be responsible for unpaid taxes or death
Before any of the heirs can lay claim to their property as outlined in the last will, an executor first has to make sure that they have repaid that person’s debts. If there aren’t enough assets to repay the debt someone had when they died, the executor may need to sell some of the estate’s property in order to finish paying off and settling those accounts.
Unless you were a cosigner for any of those debts, you don’t personally have responsibility for them once you’ve liquidated all the estate assets. The creditor may have to write off the balance if there aren’t any assets left to use for repayment. However, sometimes, you could be responsible for unpaid debts, as well as any unpaid taxes.
A creditor still has rights when someone dies
Just because the borrower died doesn’t mean the debt is no longer valid. Creditor claims have priority over any distribution of property because they have the legal right to repayment. If they don’t get their payment, some creditors may take legal action against the estate or an executor.
A creditor or taxing authority can possibly hold an executor responsible for unpaid debts if they distributed assets to heirs or handled the estate in a way that diminished what repayment they received.
The more you understand about probate law and the estate plan of the deceased, the better position you will be in to fulfill your obligations as executor. Learning about the law and your responsibilities as executor can help you avoid making mistakes that could have legal or financial ramifications for you.