The executor of an estate has a great deal of responsibility in Michigan and elsewhere. Personally assuming the decedent's unpaid debts usually isn't required, however. If you ask someone to serve in this capacity and name her as executor of your estate in your will, she has some say over who gets paid and who does not, but she would not have to reach into her own pocket to pay your debts, except in certain rare circumstances.
Liability for Debts
Liability for your debts falls to your estate after you die. No one -- not your heirs, beneficiaries or executor -- can inherit responsibility for accounts you contracted for in your name alone. Michigan's Estates and Protected Individuals Code determines the order in which a decedent's debts must be paid from his estate's assets. The list begins with your burial expenses and ends with miscellaneous claims such as consumer debt. Your executor must pay your bills and debts according to the order set out by Michigan law before making distributions to your beneficiaries according to the terms of your will. If she makes early distributions to beneficiaries, she might do so at her own risk. The beneficiaries would have to return them to the estate if the executor runs short of funds before everyone is paid. In such a case, the executor could be personally vulnerable if the beneficiaries do not return the funds and if she did not get written receipts from them when making the early distributions.
An exception exists if you co-signed for debts with another individual. If that individual is also your executor, she would be affected by this. Creditors of such joint accounts can pursue your co-signer for payment after you die. The executor can pay off these accounts out of estate funds if she wants to and if your estate has sufficient funds to do so, but she's not obligated to. If she does not, the debt falls to the other party who co-signed on the loan.
If your estate is large enough to owe estate taxes, your executor might find herself personally on the hook for this debt, but only if she's negligent in her duties. The Internal Revenue Service must prove that she knew the tax debt existed and that she made distributions from your estate to your beneficiaries anyway, without first paying it. She would not be responsible for paying your estate's entire tax debt to the IRS, but only an amount equal to the value of the distributions she wrongly made.
Your property or assets must typically be part of your probate estate before they are vulnerable to your creditors. This normally excludes assets you might leave in trust or that pass to a named beneficiary by operation of law, such as life insurance proceeds or a retirement account. If your debts are such that your probate assets cannot pay them all, your estate is said to be insolvent. Under Michigan law, any assets you placed in trust can become liable for the unpaid balance, but this applies only to revocable trusts; irrevocable trusts are exempt from this rule. After your executor gathers and liquidates all available property from all permissible sources, if she still can't pay all your creditors, they don't receive anything and have no further recourse. They can't pursue the executor personally for payment unless she co-signed with you on the loan before your death.
Under Michigan law, your executor must notify your creditors of your death by publication and also send written notice to those she's aware of. Creditors have one month after receiving notice or four months after notice is published, whichever occurs later, to make a claim against your estate for payment. After receiving claims, your executor can decide whether they're legitimate and should be paid or she can deny them. If she denies certain claims, those creditors can file lawsuits against your estate and a judge makes the final decision.