There are a few risks that come with estate administration in New York. Some of them are personal, like the strain such work may put on your schedule or how it will affect your relationships with the beneficiaries of the estate. Others are financial. Certain mistakes could actually lead to financial vulnerability for you.
While you aren’t immediately responsible for someone’s debts or taxes, you may become responsible for those unmet financial obligations if you mismanage estate assets. One of the most serious sources of liability for the personal representative of a New York estate is the debt left behind by the testator.
The estate has to pay those debts if possible. If you don’t take appropriate steps to notify creditors and pay them when possible, you may eventually face legal claims brought by creditors and could wind up financially accountable for any unpaid amounts. What are your responsibilities when it comes to debts owed by the testator?
You need to notify creditors
Typically, you need to directly notify individual creditors in the early stages of the probate process. By sending them written notice, you provide them with an opportunity to make a claim in probate court. Publication of notice of the estate proceedings may also be necessary, as there may be unknown creditors who you will not be able to directly contact.
Once you notify creditors, they typically have up to seven months to bring a claim in court. You then have to act to reimburse them appropriately.
Pay the creditors in order of priority
New York law is quite clear about what financial obligations are the most important. Probate court costs, taxes and end-of-life medical care expenses are among the higher-priority debts the estate may need to cover. Credit cards and other unsecured personal debts are often lower priority.
If there are not enough estate assets to pay all of the debts in full, you will have to prioritize paying specific ones over others. Mistakes in this process could lead to personal financial liability, which is why it is common for people to retain legal support while handling an estate.
Identifying and addressing common estate administration pitfalls will help you fulfill someone’s last wishes without increasing your personal risk.
