What an Executor Can't Do: Common Mistakes and Personal Liability

Being named executor feels like an honor, and a heavy one. What many executors don’t realize is that the role also carries personal legal exposure. Most executors who run into trouble didn’t do anything dishonest; they made an understandable mistake, such as paying a bill out of order or treating the estate account like a family account. Here’s where the lines are drawn.

Why can an executor be personally liable?

Because an executor is a fiduciary, someone entrusted with another person’s property and bound to act for the benefit of the beneficiaries and creditors. California’s official duties form for personal representatives says it directly: when the court appoints you, you become an officer of the court and must manage the estate’s assets with the care of a prudent person dealing with someone else’s property, which means being cautious and avoiding speculative investments. If you fail to obtain the court’s permission when it’s required, the form warns, you may be removed, or required to reimburse the estate from your own funds, or both. The Texas courts’ guide for independent executors likewise states that an executor has a fiduciary duty to treat all beneficiaries and creditors fairly.

Can I mix estate money with my own?

No. This is the most common and most avoidable mistake. California’s form says never to deposit estate funds in your personal account or mix them with anyone else’s; any estate account should be named as an estate account, and securities should be held in a name that shows they belong to the estate. The Texas guide says the same: keep estate funds in a separate designated account. Even a short-term “I’ll put it back” can look like misuse. See our guide on letters testamentary for how to open the estate account.

Can I pay myself or my attorney from the estate?

Only with proper authority, and the rules differ by state. California’s duties form says you may reimburse yourself for official court costs and the premium on your bond, but that without a prior court order you may not pay fees to yourself or to your attorney. In Texas, the guide says an independent executor’s compensation is governed by the will; if the will is silent, the law provides a default percentage of receipts and disbursements, and the court doesn’t approve compensation unless a beneficiary or creditor contests it. In either state, document every payment and ask the estate’s attorney before you pay anyone, including yourself. See our guide on how reimbursement for funeral costs works.

Can I distribute to beneficiaries right away?

It’s risky. Creditors may have a window to make claims, taxes may still be owed, and the law sets an order in which debts must be paid. California’s priority statute says no debt of any class may be paid until all those in prior classes are paid in full. The Texas guide cautions that for an insolvent estate, claims shouldn’t be paid until the estate has been open at least six months because of the priority rules. Distributing early can leave you personally exposed if money runs out for what’s owed. See an executor’s realistic timeline.

Can I ignore the IRS until later?

No, and this is the mistake with the most severe consequences. IRS Publication 559 says that if an estate can’t pay all of the person’s debts, debts due to the United States must be paid first, and that the decedent’s federal income tax liabilities at death and the estate’s own income tax liability count as debts due to the United States. The personal representative of an insolvent estate is personally responsible for the decedent’s or the estate’s tax liability if they had notice of it, or failed to exercise due care in finding out whether it existed, before distributing assets and before being discharged. The amount is generally the total of other payments made before paying the government, except where those other debts have priority over the government’s claim.

The IRS offers a protection: an executor can request discharge from personal liability for the decedent’s income, gift, and estate taxes using Form 5495. Even then, the IRS notes it can still assess a deficiency against the executor to the extent the executor still holds any of the decedent’s property. Because this is technical, it’s one of the best reasons to involve an estate attorney or tax professional. See taxes and benefits after a death.

What happens if I miss a deadline or a required notice?

It depends on the state, but the consequences can be real. In Texas, the guide says that failing to give required notices to creditors can make an executor, and the sureties on the executor’s bond, personally liable for any damage someone suffers from the neglect, unless that person had notice otherwise, and that failing to file the inventory on time could result in removal and a fine of up to $1,000. In California, the duties form notes that you may be removed if you fail to perform your duties or meet deadlines, and that the court may reduce your compensation. The Leon County, Texas court’s instructions add that a court may remove an executor on its own motion and without notice. If you can’t meet a deadline, ask for an extension before it passes.

Can I sell the house or other property whenever I want?

Not necessarily. The Texas guide says an executor’s power to sell estate real property should be addressed in the will; if it isn’t, your attorney must ask the court for permission, a multi-step process in which beneficiaries can object, and you shouldn’t sign a sales contract without consulting your attorney. More generally, anything where you could benefit personally, such as buying estate property yourself, is the kind of conflict of interest courts examine closely, so get legal advice first.

Do I have to keep records?

Yes. California’s form tells executors to keep complete and accurate records of each financial transaction affecting the estate and to save receipts because the court may ask to review them. Good records are also your best defense if a beneficiary questions what you did. Keep a running log of every account, payment, and communication. See what beneficiaries can ask an executor for.

How do I protect myself?

• Hire an estate attorney early, especially for tax issues, claims, and any decision where you could personally benefit; see estate attorney cost
• Keep estate money separate and document every transaction
• Get court approval when your state requires it, and ask when you’re unsure
• Wait for claim periods and tax questions to be resolved before large distributions
• Consider requesting discharge from tax liability with Form 5495 where applicable
• Have beneficiaries sign receipts for distributions, which the Texas guide notes attorneys often prepare
• Keep beneficiaries informed, since most disputes start with silence

What if I think I’ve already made a mistake?

Tell an estate attorney promptly and don’t try to quietly fix it yourself. An attorney can tell you whether the error needs to be corrected through the court or disclosed to beneficiaries, and delay or concealment generally makes these problems harder to resolve. See executor responsibilities and, if you’re sharing the role, how co-executors work.

For finding estate assets, see unclaimed property after a death.

For the forms involved, see which tax forms an executor may need.

For exactly what to record and how to report it, see Keeping the estate’s records: what to track, keep, and report to beneficiaries, which also links a free Estate Ledger spreadsheet.

This is general educational information, not legal or tax advice. Executor duties, liability, compensation, and court-approval requirements vary by state and by estate - an estate attorney and a tax professional can address your specific situation.