It comes as a surprise to many executors or administrators that the role brings personal and unlimited liability – meaning that if you make a mistake you could end up footing the bill for any financial or legal claims that occur as result of your actions.
If an executor diminishes the estate through one of their actions – for example, making a payment to a beneficiary that is beyond what they are entitled to – they then become liable to other beneficiaries for disproportioning the assets of the estate.
If the deceased estate owner was a tenant of premises, or leased any premises, the executor becomes liable to pay future rent and other charges associated with the lease.
The estate remains liable for any debts outstanding at the time of death. Executors must take care not to distribute all assets of the estate to beneficiaries until they are completely clear that all known or likely liabilities have been discharged. Executors do, however, have the power to close the administration and distribute assets to beneficiaries once any outstanding sums have been paid.
Executors who make contracts with third parties, such as estate agents, during the administration of an estate, become liable to them under contract law. However, any costs incurred can usually be recouped from the estate.
The best way of protecting yourself in your role is to take out Executors Insurance. Find out more about being an executor by clicking the ‘Executor Information’ tab at the top of the page.