One of the executor’s core responsibilities is to ensure that all debts and liabilities of the deceased are properly addressed before any distributions are made to beneficiaries. In this section, we’ll cover how to identify what the estate owes, the proper order of payment, and how to communicate with creditors — including when and how to advertise for claims. We’ll also outline steps you can take to protect yourself from personal liability. Finally, we’ll discuss how to manage an insolvent estate, where the assets are insufficient to cover all debts, and how to navigate that complex situation.
Identifying All Debts and Obligations
Prioritizing Debts – Who Gets Paid First?
Notifying and Dealing with Creditors
Dealing with Disputes or Contested Claims
Avoiding Executor Liability
Conclusion: Settling Debts Before Moving Forward
In summary, executors must ensure that all creditors of the estate are properly identified, verified, and paid, to the extent that the estate’s assets allow. One of the executor’s fundamental legal duties is to “settle the debts of the estate” before distributing any assets to beneficiaries. Fulfilling this obligation requires a thorough and methodical approach: confirming the validity of each claim, respecting the statutory order of payment, and documenting all communications and transactions.
By handling debts diligently and transparently, executors not only meet their fiduciary responsibilities, but also substantially reduce the risk of disputes, creditor challenges, or personal liability for improper distributions.
With the estate’s liabilities addressed, the executor’s next critical focus is tax compliance - including filing the deceased’s final income tax returns, addressing any outstanding amounts, and managing ongoing tax obligations of the estate itself. As the saying goes, “an executor’s work isn’t done until the taxes are.” We now turn to the steps required to navigate the estate’s tax responsibilities with care and confidence.