Did you know that if you are the executor or the personal representative of an estate in California, you are responsible for paying any associated federal and estate taxes? That duty extends further than you may think. Here is what you need to know when you agree to take on that role.
Executors have personal liability
The Federal Claims Priority Act has a broad definition of what taxes executors are responsible for under probate litigation. Debts can include distributions of bequest or portions of residuary estates to named beneficiaries. Your personal liability can involve being responsible for beneficiaries who have agreed to pay unpaid taxes. Interest can even be added to the amount owed in some circumstances.
Your duty as an executor or representative applies not only to the estate but also to any outstanding gift taxes that may not have been paid. Examples include lifetime transfers to trusts, survivorship trans and life insurance proceeds paid to beneficiaries there than those mentioned in the estate documents. What you may try to do is obtain a discharge from liability issued by the Internal Revenue Service to that you are not held personally liable for estate taxes.
Errors in trust and probate administration
Many people don’t understand the mishaps that can occur in probate and trust administration. Without proper consultation, you can make costly mistakes. If you go it alone to save money, you could make costly mistakes.
The key to efficient trust administration is to educate yourself and understand all the facts before you agree to become an executor or trust administrator. Understanding your duties before you agree to such a position can help you avoid difficulties once your loved one passes away. Know what you are getting into before deciding on an agreement for any estate position.