Estate administration comes with an assortment of risks. Personal representatives often spend hours working on estate administration. Their relationships with beneficiaries or heirs may decline due to heightened emotions during the probate process. They are also potentially liable in cases where they make mistakes related to financial obligations.
The debts and taxes owed by the decedent become the responsibility of their estate. If personal representatives make mistakes during estate administration, they may sometimes have personal liability for the financial obligations they failed to fulfill.
If an estate is insolvent, meaning it owes more in debt than it owns in assets, that risk is particularly high. How can personal representatives protect themselves?
Representation is critical to risk minimization
There are numerous obligations imposed on personal representatives. They have to locate estate planning documents and create an inventory of estate resources. They have to file tax returns and notify creditors about upcoming probate proceedings.
They also have to pay debts in the proper order of priority when there are not enough resources to cover every debt during estate administration. Small mistakes can lead to financial liability.
Attorneys familiar with state probate statutes and the nuances of estate administration can help personal representatives mitigate their financial exposure. Their support can help personal representatives fulfill their obligations and document their actions effectively in case they face claims in probate court later.
Typically, even an insolvent estate can help cover the cost of legal representation for an executor or personal representative. Hearing appropriate assistance throughout the probate process can help personal representatives properly fulfill their obligations and limit risk when an estate has sizeable debts and limited assets.