4 Common Estate Administration Mistakes to Avoid

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When a loved one passes away, the person named as the executor or administrator of their estate is given a significant responsibility. This process, known as estate administration, involves settling the deceased’s final affairs, from paying debts to distributing assets to the rightful heirs.

While it is an act of trust and honor to be named an executor, it is also a fiduciary duty with serious legal and financial obligations. Simple mistakes can lead to delays, family disputes, and even personal financial liability for the person in charge. Here are four of the most common—and costly—mistakes to avoid.

Mistake #1: Rushing to the Courthouse Without Legal Counsel

After a death, many people assume the first step is to go directly to the Clerk of Court to “open the estate.” This can be a critical error. Without a full understanding of the deceased’s assets and debts, you might:

  • Open a full probate administration when a simpler, less expensive procedure (like a Spousal Year’s Allowance) would have been sufficient.
  • Incorrectly list assets on the court filings. Some assets, like life insurance with a named beneficiary or jointly owned property, pass outside of the will and should not be included in the probate estate. Including them can create serious problems, especially if there are creditor claims.

Seeking legal advice before going to the courthouse is essential. An attorney can review the specific situation and determine the most efficient and correct path forward.

Mistake #2: Improperly Paying Debts and Expenses

An executor is responsible for paying the valid debts of the deceased, but there is a strict legal order of priority. A common mistake is to start paying bills as they arrive without understanding this hierarchy. If you pay a low-priority credit card bill and then run out of money for a high-priority debt (like funeral expenses or taxes), you, the executor, can be held personally liable for the shortfall.

Similarly, not all expenses are considered valid estate debts. Using estate funds to pay for things like food for the family after a funeral or travel expenses for relatives is not permitted. These improper payments will have to be paid back to the estate from the executor’s own pocket.

Mistake #3: Mishandling Estate Funds and Poor Record-Keeping

The executor must be able to account for every single penny that moves in and out of the estate. Withdrawing lump sums of cash is one of the easiest ways to create an accounting nightmare. If you have a bill for $27.32 but withdraw $40.00, what happened to the remaining $12.68? Without a clear paper trail and receipts for every transaction, the court will not approve your final accounting.

Any unaccounted-for funds are the personal responsibility of the executor. It is crucial to keep meticulous records and avoid using cash whenever possible.

Mistake #4: Overlooking Asset Titling and Ownership

It is essential to confirm the legal owner of every asset, especially vehicles and real estate. Titles are often not updated after a major life event, which can create complex problems.

For example, if a husband passed away years ago and a car title was never transferred out of his name, his estate may need to be opened and administered just to get a clean title. If his wife has also since passed away, you may have to administer two estates simply to sell or transfer one vehicle. This mistake can cause significant delays and expenses that could have been avoided by confirming ownership at the beginning of the process.

Avoid These Mistakes with Professional Guidance

The role of an executor is complex and comes with significant legal duties. If you want to avoid these common mistakes, or if you’ve already made a few but need help correcting them, please contact us. Call our office at (919) 256-7000 to schedule a consultation.