The executor or personal representative of an estate has many responsibilities. They are at risk of removal from their position or possibly financial responsibility if they fail to fulfill any of the tasks associated with estate administration.
They have to appear in probate court. They have to locate and submit testamentary documents, such as wills, to the courts. They have to follow not just the instructions provided by the decedent but also state statutes.
In cases where they fail to follow the law properly, personal representatives may sometimes have direct financial liability for the impact of the mistakes they make. That liability can be a sincere concern for those managing the estate of an individual with more debts than assets. Mistakes during estate administration might put them at risk of financial hardship.
What happens to an estate saddled with debts?
The property that belongs to an individual becomes the property of their estate when they die. Their estate must also assume responsibility for covering all of their debts. However, a personal representative may quickly determine after reviewing financial records that the decedent had more debts than assets.
In such scenarios, they may require assistance to ensure they handle things in a manner that protects themselves from financial exposure. Personal representatives have to send appropriate notice so that creditors can make claims in probate court.
They also need to pay claims in the right order of priority as established in state statutes. That order of priority holds probate expenses and funeral costs as the top priorities. Then, funeral expenses require payment.
Taxes and other debts are the third priority. The personal representative may need to liquidate all estate resources to pay the claims made by creditors. They need to take care to properly manage estate resources, send notice to the right parties and use assets to pay the right creditors in the right order. Typically, estate resources can help cover the costs of legal representation during probate proceedings to reduce the risk the personal representative must assume.
Having support when communicating with creditors and attempting to resolve a decedent’s debts can reduce the likelihood of mistakes during estate administration that could result in liability for the representative. Personal representatives who follow the right procedures shouldn’t have to worry about taking on responsibility for addressing a decedent’s debts.