Grief is a powerful emotion, and it can be very hard to accept the unpleasant reality that your loved one recently died. However, if you have accepted the role of executor or personal representative of the estate, it is your responsibility to handle the deceased’s estate in accordance with both their instructions and Oklahoma state law.
One of the most stressful aspects of taking control over someone’s estate is the attempt to resolve all of their outstanding financial obligations. Mistakes with the management of estate assets might lead to either of the two financial responsibilities below becoming your responsibility.
Personal debts owed by the testator
Typically, the representative of an estate is not financially responsible for debts that the estate cannot repay. However, you could end up facing claims by creditors if you distribute assets to beneficiaries before notifying and paying creditors.
One of your most important obligations will be settling any remaining debts. You need to provide written notice and then allow creditors an opportunity to make claims in probate court. You should send notice within two months of assuming your role. The creditors have quite a long time to assert their rights. They can demand payment for up to five years after receiving notice.
You can only distribute assets to others once you have given creditors a chance to ask for repayment in probate court and appropriately paid all valid creditor claims in order of priority.
Income taxes and estate taxes
Your role will typically necessitate handling certain tax responsibilities for the testator after their death. Filing their final income tax return will be an important obligation, and the estate should retain enough assets to pay any outstanding taxes owed.
In situations where the estate is worth millions of dollars and is subject to estate taxes, you will need to pay those taxes before distributing the remaining assets among beneficiaries. If you mismanage resources from the estate in a way that prevents the payment of taxes or creditors, then you could face claims in court related to those resources.
Understanding the possible consequences that may arise from mistakes made during probate administration will help you protect yourself as the executor of an estate.