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Estate administrators can incur liability for debt-related mistakes

On Behalf of | Mar 20, 2024 | Probate & Estate Administration |

An individual who serves as the personal representative of a Kentucky estate has a lot of work ahead of them. The probate process requires communication with multiple parties, attending hearings in probate court and the management of valuable estate assets. A personal representative might be at risk of financial liability if they make mistakes during estate administration.

Oftentimes, the issues that lead to personal liability stem from the financial obligations of the decedent. Debts owed by the decedent at the time of their passing become the responsibility of the estate. The personal representative could end up financially responsible for those debts if they make any major mistakes during probate proceedings.

What must the representative do?

There are several key steps that a personal representative must take to minimize their liability related to estate administration. The first step involves locating financial records and estate planning paperwork. Once they do so, they may then go to court to initiate the probate process.

After the courts approve the appointment of a specific individual as the representative of the estate, that person must then notify creditors about the upcoming probate proceedings. Kentucky probate law requires written notice submitted to known creditors. Personal representatives typically also publish notice in local newspapers in case there are unknown creditors that they cannot identify by going over the decedent’s financial records.

Before someone distributes any assets from the estate to beneficiaries, they must first use any available resources to pay valid debts. Estate administration may involve waiting for months before beginning the asset distribution process. Creditors generally have six months from the date when the courts appoint the personal representative to file a formal claim for reimbursement.

The personal representative has an obligation to use any and all estate resources to pay creditors who file valid claims. If the estate does not have enough resources to pay all debts and obligations, it is important to ensure that those with the highest priority receive payment first. If someone makes mistakes about the order of debt repayment or distributes assets before settling creditor claims, they could have personal liability for those mistakes.

A personal representative may require the guidance of a probate lawyer to ensure that they follow the right procedures during estate administration. Properly handling a decedent’s debts can protect a personal representative from financial liability related to their role.