CAN MY EXECUTOR BE SUED?
“I want to name my son as my executor,” the woman tells me. “If I do, is he personally liable for any debts that I have when I die?”
I’m a very lucky lawyer. I’m a “transactional attorney.” A transactional attorney develops plans that help people through a given problem (such as, possible, future mental incapacity; passing their assets after they die; or paying for the cost of long-term care) and draft documents to carry-out the plan I develop.
But being a transactional attorney means that I have to be mindful of the real issue that people are attempting to address using my services. When someone comes to me and asks me to draft a Will for them or a power of attorney, they’re not only asking me to put a plan in place to pass their assets after their death or to permit someone to make financial decisions for them if they cannot, they’re also asking me to give them a little piece of mind.
The person wants to feel that they’ve taken care of their affairs so that they’re protected and so that their family is not burdened. They want to make things as easy as possible for their family.
One issue that people worry about in naming a family member as their executor or as their agent under their power of attorney is the possible, personal responsibility of that family in their role as executor or agent. For instance, if the woman above names her son as her agent under her power of attorney and later enters a nursing home, is she obligating her son to pay her nursing home bill after her money is depleted? If she dies insolvent, without sufficient assets to pay the bills of her estate, is she obligating her son who is her executor to pay her debts from his own funds?
The short answer is no. First of all, just because the mother names the son as her agent or as her executor doesn’t mean that the son even has to accept those roles. The son could refuse to act as the woman’s executor or agent. That is why it is important that you speak to the people you are thinking about naming for these roles; you want to make sure that they are willing to accept their obligations.
But once someone accepts their role as executor or agent, they are not personally liable for the principal’s debts; however, as with anything legal, there is a caveat: if the executor/agent squanders the assets of the estate, then the executor/agent could be personally responsible for the debts of the estate.
Say what? For example, if an executor were to sell the mother’s house, worth $200,000, for $50,000, the executor could be held personally responsible for his improper actions. The executor/agent has a responsibility to act reasonably and with due diligence. Essentially, that just means that he has to deal with the estate’s assets in a reasonably intelligent manner.
He doesn’t have to invest the assets so that they produce a 200% gain in the period of six months, but he might have to invest the assets in a money market account paying the prevailing rate of interest. He doesn’t have to sell the descendant’s house for more than it’s worth, but he has to sell the house for what it’s worth.
Being an executor or an agent does not, in the vast majority of cases, open the person named to those roles to personal liability. He must only act reasonably. Furthermore, if he is ever confused or unsure of the proper course of action, he is free to retain counsel and pay for such advice from the estate.
When choosing an executor or agent, chose someone who shows organizational skills and who isn’t afraid to admit when he needs advice. Those two qualities will go a long way towards the proper administration of any person’s estate.