First, remember that a decedent’s debts are not your personal responsibility—as long as you follow the rules. In other words, if there isn’t enough money in the estate, then you don’t need to pay from your own pocket. However, it’s critical to pay liabilities in the proper order, and your attorney should help you determine who gets paid when there isn’t enough to go around. If you pay the wrong person, then the person entitled to that money could come digging into your pocket.
Beware: The Executor is Personally Liable for Seven Months . . . and Maybe MoreDebts are often paid toward the end of the administration process—or at least seven months after the executor is appointed. This is a statutory period where the executor can be held personally liable if they pay the beneficiaries, a debt pops up later, and then there isn’t enough money left to satisfy the debt. Once seven months passes, the executor can pay the beneficiaries without liability for any unknown debts. If a previously unknown creditor appears after seven months, that creditor cannot go after the executor personally, but the creditor can look to the beneficiaries to pay the debt.
If the executor knows of a debt, they can’t simply wait seven months and then pay the beneficiaries. Creditors must be satisfied first.
Is This Debt Even for Real?Keep track of all notices you receive from creditors—credit cards, personal loans, everything—and discuss their validity with your attorney. Creditors could be scammers or simply mistaken. But even legitimate debts are sometimes unenforceable or could be negotiated. Enforcement of a debt could be barred for various reasons including the statute of limitations. Don’t assume all debts are valid.
Fight for Your RightsIf you believe a debt is invalid, there are several mechanisms available to determine its validity whether informally or through a court proceeding.
Pay Legitimate DebtsAn executor is responsible for paying all known debts from estate funds. Where there is no last will, debts are paid “off the top” before dividing the estate among the heirs. If there is a last will, there’s usually a clause directing that debts be paid from the residuary estate, meaning what’s left after all specific gifts (demonstrative bequests) are satisfied such as “I leave my iPhone to Jack” or “I leave $10,000 to Leora.”
Summing UpSo remember, as long as you handle payment of debts properly, you’re free from liability. Evaluate all creditor claims with your estate attorney. Consider fighting those debts you believe to be invalid. And pay legitimate and enforceable debts. You’ll keep creditors out of your pocket, earn your executor commission, and fulfill the wishes of the testator.
Do You Need The Help Of An Estate & Trust Litigation Attorney In The New York Metro Area?
If you need legal help with an estate issue you should speak with an experienced estate litigation attorney as soon as possible. Contact us online or call our New York City office directly at 212.227.2424 to schedule your free consultation. We proudly serve clients in Brooklyn, Manhattan, Queens, Staten Island, Nassau County, Westchester County and throughout New York as well as northern New Jersey.