Am I responsible for a deceased Person`s debts when they die?
Posted on January 19th 2022When advising in relation to a deceased person`s estate, one of the most common questions asked is: Am I responsible for the deceased`s debts?
Generally, the answer to this question is NO.
When a person dies, one of the roles of the Executor named in their Will (or Administrator if there was no Will) is to establish the value of the assets and liabilities comprised within the estate. As far as liabilities and debts are concerned, these are the monies owed by the deceased person when they die. Debts can include for example, things like funeral expenses, credit cards, mortgage, and other loans etc. A person's debts do not simply go away when they die; as part of the process of dealing with a deceased`s estate, these debts will ultimately have to be repaid. Joint debts/liabilities will usually be treated differently and legal advice should be taken where this is relevant.
But who repays these debts? These debts are liabilities of the deceased’s estate itself. The deceased`s relatives, whether that be their children, spouse or parents, are not personally responsible for them from their own monies.
Once the deceased`s assets have been realized, then the Executor of the estate has a duty to repay or discharge these debts before the estate is distributed to the beneficiaries named in the Will.
It is important to appreciate, however, that if there are limited assets within an estate and insufficient monies to repay all the debts, then certain debts have priority and must be repaid first. For example, funeral expenses are treated as a priority and should be repaid in priority to most other debts and liabilities. The priority or order in which debts should be repaid from an estate can be complicated and legal advice should always be sought. This is important as if an Executor/Administrator fails to follow the correct order when repaying debts this could mean they incur personal liability for some of the debts not paid.
If there is not enough money in an estate to be pay all of the debts, then provided the correct procedures are followed, these debts may be written off. Debts can be a complicated area and we would always recommend seeking proper independent legal advice.
For more information or advice, contact us on 01384 371622 or visit our website.