I talk a lot about planning, and getting your documents in order. Today, I’m going to talk about what executors need to do to best protect themselves when administering an estate.
- Don’t give out the estate money too early. You will have taxes, and there may be debts. There is no reason to rush to distribute the estate. Holding onto funds is better in the early stages.
- Be careful where you spend estate funds. Draw a very hard line between expenses that belong to the estate, and expenses that belong to you.
- Keep on top of taxes. They still need to be filed, even after death. If you ignore taxes, arrears will build up; if the arrears are your fault, you will have to answer to the beneficiaries.
- Follow court orders. This should go without saying, but if a court orders you to do something, or not to do something, be obedient.
- Hold off on a final distribution until you are sure that all bills and taxes are paid. If something comes in after, you may be personally responsible for paying it.
- Do not ignore debts. If you are aware of them, distributing money to beneficiaries is fraud.
- Get advice. Ideally from a lawyer who practices estates, but at least from a professional. You don’t know what you don’t know.
Keep these in mind, and your next job as an executor will go much more smoothly.