Administering an estate comes with numerous obligations. Personal representatives must attend court hearings, manage resources and fulfill the terms of an estate plan. In many cases, they also need to fulfill the lingering financial responsibilities of the deceased individual.
Personal representatives may worry that they could become directly liable for debts if they accept the responsibility of estate administration. Some people may even consider declining the position because they don’t want to put their personal resources or future income at risk.
Does agreeing to oversee estate administration make a personal representative responsible for the debts owed by the deceased individual?
Mistakes can lead to liability
Debts that people accrue become the responsibility of their estate after they die. Communicating with creditors, paying taxes and resolving financial obligations are all key aspects of the probate process.
Typically, the person administering an estate is only directly liable for debts if they are a cosigner for those debts or if they are the spouse of the decedent and the financial obligations are marital debts. Otherwise, it is the estate itself that has responsibility for those financial obligations.
The personal representative simply needs to follow the appropriate probate procedures to protect themselves from having direct liability. Those procedures include reviewing financial documents, sending letters to known creditors and publishing notice of upcoming probate proceedings so that creditors can file claims as appropriate in probate court.
In scenarios where the estate may have more financial obligations than resources, the personal representative also needs to ensure that they pay the debts in the appropriate order. They should handle all outstanding financial obligations, including personal debts, taxes and probate expenses, before distributing major assets to beneficiaries.
Provided that they follow the right steps, personal representatives do not have to worry about becoming responsible for the decedent’s debts. If they make major mistakes or distribute assets prematurely, then they could potentially face a degree of financial liability.
Securing legal representation when acting as an estate’s personal representative can help people avoid financial liability during estate administration. Concerns about financial obligation should not deter people from acting as personal representatives as long as they know how to protect themselves.
