Three rules of executor liability for debts of an estate

Rule 1

An executor is not automatically liable for the debts of the deceased just because they are the executor.  When you step into the role of the executor of an estate you do not automatically become personally liable for all of the debts of the deceased.  Therefore, do not get hounded into believing that you are liable for the debts of the deceased – you are not.  But see Rule 3 for how you can become personally liable if you do not handle the deceased’s debts properly.

Rule 2

The executor is personally liable for all debts that the executor incurs after the death of the deceased.  For instance, if the executor hires movers, accountants, or lawyers to assist with the estate, then the executor is responsible for ensuring that those debts are paid.

Rule 3

An executor is liable for is ensuring that the debts of the deceased are handled properly; in other words, it is the duty of the executor to ensure that all of the creditors of the estate are treated equitably, and if possible, are all paid in full from the estate.  An executor will be liable if one creditor receives more (as a % of their debt) than another creditor.  Also, an executor will be held personally liable if the executor distributes any of the estate to beneficiaries and without first ensuring that all creditors are paid in full.