Serving as an executor means doing a lot of thankless work and possibly damaging your relationship with people involved in the estate. Emotions tend to run high while people deal with grief and when there is valuable property involved.
Social consequences and personal stress aren’t the only risks involved in estate administration. You also have some personal financial risk if you make mistakes during the estate administration process.
One of the biggest concerns for an executor is the possibility that a creditor could hold them personally responsible for a debt that they didn’t pay with assets from the estate. When is an executor at risk of a creditor making a claim against them personally?
When they are a cosigner for the debt
Typically, the right of creditors to claim repayment ends when the estate runs out of assets. However, if the executor was a cosigner for one of the accounts, they may have to continue paying on that account even after exhausting the assets from the estate.
When they distribute property without paying the debt
The executor has to notify known creditors about the death and typically needs to publish notice for unknown creditors as well.
Only after all of the interested parties have had the opportunity to bring claims against the estate and the executor has settled the account can they begin to distribute property to the beneficiaries. If creditors can show that you gave out property without first repaying them, you could be responsible for those unpaid balances.
Learning about the risks you incurred during estate administration can help you avoid falling victim to them.