Executors are under a duty to administer and distribute the deceased’s estate correctly. This may seem like a simple task. However, many executors underestimate the time investment required and the frequency with which complex legal and tax issues arise.
Moreover, there is no room for error when winding up an estate. Mistakes can lead to personal liability.
If you are considering acting as an executor, you may wish to read our FREE PROBATE GUIDE. The guide provides a brief introduction to estate administration to help executors understand their duties and responsibilities.
It is a common misconception that a person’s debts die with them. It is the executors’ responsibility to pay the debts of the deceased.
After collecting in the deceased’s assets, the executors should take steps to settle all outstanding debts. They must pay creditors in full before distributing the estate to the beneficiaries.
An executor can be held personally liable for the debts of the estate up to the value of the estate. If they distribute the estate and leave a creditor outstanding, that creditor may bring a claim against the executors. This is the case even where the executor had no idea the debt even existed.
Unknown debts are one of the greatest dangers to executors. It is best to take every possible precaution.
If there are insufficient funds to satisfy the deceased’s debts in full, the estate will be insolvent. There are specific legal rules which determine which creditors are paid first in an insolvent estate; executors must comply with these rules to avoid personal liability.
If you are looking at a potentially insolvent estate, you should exercise extreme caution. We strongly recommend seeking professional advice. Inexperience is not a defence if you make a mistake.
What protections are available for executors
It is vital that executors scrutinise the debt position and seek the proper protections when making distributions.
If you are not comfortable with the responsibility of administering an estate or are worried about being held personally liable, you can seek support from a professional.
A professional probate solicitor will be familiar with the administration process and have experience in settling outstanding debts. They will be able to provide you with the reassurance you need that you are fulfilling your duties.
If you would like assistance with an estate administration, please click here for our contact details. We would be happy to help.
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