In New York and most other states, the executor of an estate may not need to take immediate action after someone passes away, but many do. It is important for executors to take some time to grieve and recover emotionally. This makes it easier to proceed with a clear head.
Even beyond the emotional strain of losing a loved one, there are some tasks that executors should not rush to complete. When they do so, these decisions may lead to personal financial liability that could prove devastating.
Early distributions
Forbes reminds executors not to start offering beneficiaries their shares of the estate too quickly. If an executor does this before paying taxes, debts and other liabilities, the person may become personally liable for whatever the estate failed to cover. Because of this, professionals refer to premature distributions as at-risk distributions.” Sometimes, beneficiaries do return portions of their distributions to cover liabilities for the executor, but it is often better not to take the risk.
Paying bills too early
MarketWatch warns that paying bills as soon as they arrive can also prove problematic. It might seem like the financially responsible thing to do, but utilities, credit cards and other liabilities are not top priorities. Bills owed to the federal government and funeral expenses come first. If the executor does not have enough assets leftover in the estate to cover these liabilities, the person may end up paying out of pocket.
Most people who rush to settle the estate early do so with good intentions. However, those good intentions often lead to harmful effects. Always double-check the proper order for completing tasks to ensure all priorities receive due attention in the correct order.