Conflict and thankless work are often a part of estate administration. Those who agreed to serve as the executor for an estate may have to deal with arguments or disagreements with a co-executor or trustee as well as disputes with heirs and lots of red tape.
The risks don’t end with mere inconvenience and frustration. If the estate is very small, for example, you may not receive any compensation and may even need to pay certain costs yourself.
As an executor, you will have some degree of financial and legal risk if you make mistakes while settling someone’s affairs and completing their last wishes. What consequences could you face as an executor?
You could be responsible for unpaid debts and taxes
Before you try to distribute property to beneficiaries for an estate, you first need to settle the accounts of the deceased party. Paying off creditors and fulfilling all tax obligations before distributing assets is very important.
Generally, the executor has to wait long enough for creditors to respond to the death and make a claim regarding the debts they still have outstanding. While the executor isn’t responsible for the repayment of debts beyond the value of the assets in the estate, any amount that they distribute without repaying debts could become their responsibility.
If creditors discover that you handed out property to the beneficiaries without first repaying them, they could take you to court and hold you responsible. Understanding the law and the implications of the estate plan will make it easier for executors to avoid mistakes during estate administration.