Will You Inherit Your Loved One's Debts After Their Death?
23 May 2017
You are not automatically responsible for the debt of a husband, wife or civil partner. The only time you would inherit your loved one’s debts after their death is when the debt is also in your name, such as a joint mortgage. Otherwise the debt will be paid from the Estate of the deceased.
Debts only pass from a deceased person’s Estate to someone else if the debt was a joint debt. So, for example, if you hold a joint mortgage or credit card with the person who has died, this debt will become yours on their death and you will be solely responsible for it.
When this happens you need to tell the creditor that your loved one has died. The debt can then be put into your sole name. In some cases, such as a mortgage, you might find that you are struggling to meet the payments alone. If so, you might be able to negotiate the repayments. Or there might even be an insurance policy that will pay out in the event of a death, such as a life insurance policy.
Where a debt is in a person’s sole name, it will be payable from their Estate when they die. You will not need to repay this debt from your own money. If there are not enough assets in the deceased person’s Estate to cover all of the debts, they will be re-paid according to an order of priority.
This order of priority means that funeral and administration expenses are to be paid before any other debts. Secured debts such as mortgages would then be payable. Finally unsecured debts such as credit cards and bills would be payable from the funds left over.
If there are not enough assets in the Estate to pay off all the debts in full, some debts may need to be written off.
Paying Off Sole Debts
The Executor or the Administrator is responsible for paying off the deceased person’s debts from the Estate.
If you are the Executor or the Administrator, you need to find out all of the debts that the deceased owed. Sometimes there will be a debt that you don’t know about. To ensure this does not cause problems later down the line, you should place advertisements in newspapers, giving creditors the opportunity to declare the debt. If you don’t do this, a creditor may come forward years later and demand that the debt be paid.
You should let all the creditors know that the deceased has passed away. You then need to get a Grant of Probate (or Grant of Letters of Administration if there was no Will). This gives you the legal authority to access the deceased person’s assets, including their bank account. You can then pay the debts according to the order of priority described above, with funeral and administration taking precedence. Afterwards you can go on to pay secured debts, followed by unsecured debts.