When you agree to serve as the personal representative of a Virginia estate, you know that there will be a lot of work involved. You will be the one that has to go over someone’s financial records, and it will also be your responsibility to attend probate court proceedings.
What you may not realize when you accept the position is that you may also become personally liable for some of the financial obligations of the estate if you don’t handle things properly. There are two forms of financial liability that may pass to you as the representative if you don’t manage the obligations of the deceased appropriately.
You will have to file tax paperwork on behalf of the deceased and pay any outstanding tax obligations they had when they died. It is common for the representative of an estate to handle someone’s final tax return.
You will also have to address any estate taxes that apply to multi-million dollar estates. If the testator left instructions for you to liquidate estate assets, there could potentially be income tax obligations for the estate itself.
You should retain assets to fulfill those obligations and ensure that you file all of the necessary paperwork. If you distribute property from the estate to beneficiaries without keeping the necessary funds to fulfill the tax obligations, you may become personally responsible for those unpaid taxes.
Unpaid personal debts
The money owed by the deceased becomes the obligation of their estate. Any and all legitimate debts pass to the estate created when someone dies. It is your obligation to notify creditors about probate proceedings and then to pay them with property from the estate.
If there aren’t enough assets in the estate to pay all of the debts, you will pay them off in order of priority. Mistakes regarding which debts you pay or the distribution of property to beneficiaries when valid debts still remained might lead to creditors bringing a claim against you personally for those unpaid balances.
Learning more about your responsibilities and the liabilities that come with estate administration will help you protect yourself when you serve as the personal representative of an estate.