Creditors seem to be extremely aggressive with executors, widows, and others left behind to deal with an estate. I've seen many a person believe the threats from creditors and cough up money they did not legally owe. I'm really glad that a reader recently asked me a question about this, since a lot of people seem to be in his shoes. His question and my response are below:
"I am an executor of my brother's will. He signed over his inexpensive car to his son and gave his children money before he died. He died broke and no assets. We have contacted his creditors and they claim I am personally liable as the executor for his debt and are threatening to sue me. Can they do this? Am I liable for any debt my brother incurred?"
No, an executor is not personally liable for the deceased's debts. By acting as your brother's executor, you are agreeing to use his assets to pay his debts (to the extent that they are able to) but you in no way involve your own personal assets.
Your responsibility as executor is to maximize whatever you can from the estate. Apply for the CPP death benefit if your brother was eligible for it. Check into the possibility of any unpaid wages or pensions. Sell any of your brother's personal and household goods that have even a small value. Collect any money that people might have owed to him. Apply for any tax refunds that might be coming to him. Check thoroughly for any paperwork that might suggest he had an insurance policy privately or through his employment. Do whatever you can to ensure that you maximize what is available to pay the creditors.
You are not obligated to take the car back from the son or to collect the money from his children. He was entitled to give his children his own assets while he was alive.
Once you have scraped together what you can from the estate, use these funds to pay your brother's bills and debts. It sounds as if there won't be nearly enough to satisfy the creditors, so you may end up offering them a few cents on the dollar. If that's the best that the estate can do, the the creditors can choose either to accept it, or to sue an estate with nothing in it.
Make sure you provide complete information so that if they foolishly decide to sue the estate, you can establish that they had the relevant evidence before the lawsuit and therefore should be paying your legal costs as well as their own.
An estate creditor has no grounds to sue an executor personally. However, they still threaten to do so because often the threats work. Most of the time, the threats seem to come from collection agencies who have no understanding of the law of executorship.