Estate administration or probate proceedings can be a big challenge for those who take the responsibility of fulfilling someone’s last wishes and settling their obligations to others. As the executor or personal representative of an estate, you will likely have to commit a large amount of time for many months to the process of the state administration.
You may need to attend court hearings, physically manage estate assets and complete dozens of complicated phone calls. In addition to all of that work, you may also have risk for some significant financial losses, often because of a mistake that you like me. What are two of the most expensive errors that those administering an estate often made?
They fail to pay taxes or debts
The most pleasant aspect of estate administration is often transferring assets to specific beneficiaries. Watching someone smile when they receive a keepsake of their beloved grandmother can make all of the stress involved in estate administration seem worthwhile.
However, if you start distributing assets from the estate too early, you may not have enough supplies on hand to properly settle the deceased party’s financial obligations. For unpaid debts and taxes in a situation where the estate does not have sufficient resources. However, in a scenario where you improperly distribute assets, creditors and government agencies can potentially hold you responsible for the financial obligations that the estate did not fulfill.
They pay for their own lawyer
In theory, the representative of an estate has the right to bring in legal assistance. After all, they could be personally responsible for any mistakes that they make during probate proceedings. Typically, the assets from the estate will cover the cost of an attorney’s representation.
However, if the individual handling the estate is not aware of that right, they may pay with their own money for a lawyer and then distribute proceeds from the estate before realizing their mistake. There may then no longer be sufficient resources for them to pay the lawyer from the estate if they eventually realize their mistake.
Attorney costs typically take precedence over even debts, so you should not need to use your own resources to cover the cost of estate administration. Learning about common estate administration errors can help protect you from financial hardship related to your duty as the executor of that estate.