Serving as executor of an estate means dealing with a lot of stress and possibly winding up in a disagreement with your loved ones, all for very little compensation. In some cases, executors can also find themselves facing financial and legal consequences for the duties that they perform for their loved ones.
You shouldn’t have to worry about paying out of pocket in addition to doing what is all too often thankless work as the executor of an estate. Knowing a little bit more about the risks involved with handling an estate as executor can help you make better decisions and protect yourself during probate and estate administration.
You may be responsible for unpaid debts or taxes
You probably already know that one of the first things an executor must do is create an inventory of assets from the estate, provide documentation to the probate courts and start the process of repaying debts owed by the deceased.
Filing taxes, paying and closing accounts, and otherwise managing the financial aspects of the estate are among the most important duties of an executor. If the estate runs out of assets before all the creditors get paid off, that is not your responsibility. However, if you begin distributing assets to family members before you pay taxes or debts, you could find yourself responsible for the amounts distributed improperly.
You might wind up paying out of pocket for some of what’s necessary
Some people are careful to provide for the coverage of necessary expenses in their estate plan and may even leave a little extra to their executors. Others don’t bother to reimburse their executor. If you have to travel, retain an attorney or pay a financial professional, the costs could wind up paid out of pocket if you aren’t careful with documenting your need for that help or don’t have access to resources.
You can face challenges due to mistakes or unhappiness
It is possible for you to find yourself dragged to court by unhappy beneficiaries or those who don’t feel like you handled the estate properly.
Having legal representation to protect you as executor and making sure that you comply with the terms in the last will, as well as state law, that will go a long way toward protecting you from claims made by those unhappy with your actions as executor.