Will Wednesday: Who pays when the estate gets sued?

Q. Who pays when the estate gets sued?

A. Traditionally, it was acceptable to use the beneficiaries’ money from the estate to defend and pay for legal actions brought against the estate during administration.

Courts today are re-examining the traditional access to estate money in respect to lawsuits; they may impose restrictions or prohibit the executor from using estate money to fund the cost of litigation against the estate.

If the executor is determined to be negligent and causes the estate to shrink, he or she may be required to make restitution out of his/her personal assets to the beneficiaries, creditors or other parties that suffered a financial loss.