People who agree to serve as executors or personal representatives often have to make sacrifices. They give up some of their free time to oversee the administration of an estate. They may experience relationship setbacks with friends and family members because of the responsibilities that they assume. In some cases, they may even eventually face legal controversy.
Beneficiaries and heirs may try to remove them from their position in some cases. Other times, interested parties may try to hold a personal representative financially accountable for the choices that they make during estate administration. There are several ways that personal representatives may unintentionally expose themselves to legal and financial risk.
When can estate administration lead to personal financial liability for those overseeing the probate process?
When they don’t fulfill financial obligations
Estate administration requires communication with interested parties, including tax authorities and creditors. A personal representative may need to file an income tax return on behalf of the decedent. There could be estate income taxes or estate taxes due as well. Additionally, they need to communicate with creditors and respond to any valid claims presented to the probate courts.
Creditors ranging from healthcare providers to student loan companies can request repayment using estate resources. The failure to provide notice or properly distribute estate resources to creditors before beneficiaries and errors might result in outside parties taking legal action against the personal representative for unfulfilled financial obligations.
When they improperly manage resources
Estate administration can involve numerous demanding tasks. The personal representative may need to secure real property and then sell it. They may then need to distribute the proceeds of the transaction among beneficiaries in a specific manner. They might have to run a business or make investment decisions about estate resources.
If a personal representative engages in self-dealing for personal gain or proves incompetent when managing estate resources, they could face financial claims brought by the beneficiaries of the estate. Beneficiaries and heirs can seek the removal of personal representatives who cost the estate money. In more extreme cases, they can even try to hold the personal representative accountable for the impact that their choices have had on the value of the estate.
The more complex an estate is, the more challenging it may be to administer the estate. Securing legal support during probate proceedings can help protect personal representatives from financial liability. Those who understand their obligations are often less likely to make mistakes that may lead to litigation.
