Can an executor back away without personal liability if the job is too much?

If a person takes on the job of executor and finds that she can't handle it, can she back out? And if she does, will she incur personal liability? A reader asked me about this recently. As this situation is one that I hear about frequently, I decided to share this. His question and my answer are below:

"My father in law just passed away last week. My wife has been named as executor in his will but I'm not sure she is able to deal with her father's estate. He was in debt way over his head and his estate is about negative -$48,000 from what we can calculate so far. His house has 2 mortgages totaling $198,000 but the house is way out in the country and may sell for about $175-$200K. He owed about $35,000 to eight credit card and credit lines. He had about $300 in his bank account when he died. No life insurance. Should my wife decline to be executor and walk away? If she does take on the job and can't handle it, can she back away without personal liability or costs?"

There are two issues that I think should be addressed  here. One is the idea of backing away if she can't handle it. The other is personal liability for costs.

A person who takes on the job of executor is not legally able to simply walk away if the job proves to be too much. Your wife cannot be forced to take on the job, but she can only turn it down right at the very beginning. This is called renouncing, and must be done in writing in the proper form. If your wife has already taken some actions on behalf of the estate, it may already be too late for her to renounce. If she has gone to the bank or the credit card companies, for example, saying that she is the executor, then she is probably on the hook for the whole job. Simply paying a few bills or paying for the funeral would most likely not be enough to establish that your wife was acting as an executor.

If, after doing her best with the estate, she really needed to quit acting as executor, your wife could ask the court for permission to withdraw. If the court gives permission, it will ask your wife to prepare an accounting statement showing everything she did with the estate, and to pass that accounting with the court. This is so that whoever takes over from your wife knows where to start. This is also to ensure that if something goes wrong, they'll know which executor was in charge at the relevant time.

I can't tell you whether or not your wife "should" walk away. It's a complex decision. I would like your wife to consider who will take care of the estate if she does not. You haven't said whether there is an alternate executor named. Yes, being an executor is a giant pain in the neck, but it's something that many people do out of a sense of moral obligation to family members. If, however, acting as executor is going to cost your wife a lot of out-of-pocket expense that she simply can't afford, that may be the deciding factor.

This brings us to the issue of personal liability. An executor is not personally liable for the debts of a deceased person. The executor's job is to use the assets of the estate to pay the bills to the extent possible. When there isn't enough money to go around, there is a lot of work and stress for the executor but generally not enough funds to pay the executor a fee.

The credit card companies are unsecured creditors. That means that unless the house sells for an unexpectedly large sum, the credit card companies may get nothing at all. This isn't going to make them happy. At this point, some credit card companies will actually tell executors that they are personally liable. Sometimes they are pretty persistent about it. However, your wife doesn't have to pay the deceased's debts. The credit card companies keep telling the executors they must pay personally because lots of executors believe them.

Another thing to keep in mind is that if your wife decided to back out of the executor job at a point in which assets were left in a precarious position, she might end up incurring liability. For example, if she left the house vacant, unsold, and uninsured and it burned down, she would be on the hook for that loss.