Being responsible for administering the estate of a loved one after they’ve died is no easy task, and not without risk, not least if they’ve left debts behind. It’s a common misconception that unpaid debts will be automatically written off on a person’s death, but this is simply not the case. As such, as either an executor or personal representative of the deceased’s estate, discharging any outstanding debt will form an important part of your responsibilities.  

Am I personally liable for the debt of a loved one?

In the UK, debt isn’t inherited, which means that family or friends will not be liable for the individual debts of the deceased. This means that when a loved one dies with an outstanding loan, credit card or any other debts, provided these were in the deceased’s sole name they will not pass to you or anyone else, not unless you or any other individual provided a guarantee. 

However, even if you’re not directly responsible for repayment of the debt, for example, as either a joint account holder or guarantor, an outstanding balance will still need to be paid from the deceased’s estate prior to any assets being distributed amongst the beneficiaries. 

How do I know what debts are owed by the deceased? 

Part of acting as an executor or personal representative is taking reasonable steps to establish what debts might be owing and if there is enough value in the estate to discharge these. There are various different ways of doing this, although checking the deceased’s paperwork and bank statements, both manually and online, is usually the best place to start.

Needless to say, it’s possible that some debts may go undetected during a search of the deceased’s financial affairs, where paperwork or records have been lost, destroyed or deleted, especially if a debt dates back several years. It’s also not uncommon for unidentified creditors to surface at a later date, after an estate has already been distributed, where you could be held personally liable and be required to repay the debt out of your own pocket. 

To ensure that you’re protected from any liability, you can place an advertisement in the London Gazette and local newspapers requesting unknown creditors to come forward —known as a “Deceased Estates Notice”, this will demonstrate that sufficient steps have been taken to locate creditors prior to distribution of the estate. You’re not under any legal obligation to place a notice, but if you fail to do so you could put yourself at serious risk.

In what order do any debts need to be discharged?

In some cases, having determined the total value of the deceased’s estate, there may not be sufficient funds to pay off any outstanding debt. If the deceased had more debts than assets, their estate will be classed as insolvent. This means the beneficiaries won’t receive anything, where all assets must instead be used to clear the outstanding liabilities.

In these circumstances, executors and personal representatives will need to discharge each debt in a particular order. This is known as the order of priority, where any failure to follow this order correctly could again result in you becoming personally liable to the creditors. The order of priority means that secured debts such as a mortgage must be paid prior to even funeral expenses and costs relating to the administration of the estate.

Given the risk involved of dealing with an insolvent estate, you may want to consider renouncing your role and responsibilities as an executor, although ideally this should be done before you have become actively involved in dealing with the deceased’s affairs.

Should I seek legal advice when dealing with a deceased’s estate?

Given the potential consequences of failing to identify all outstanding creditors or incorrectly administering an insolvent estate, it's often best to seek expert advice from a probate specialist as soon as possible. In this way you can explore the options available to you and what steps to take to protect yourself from any personal liability.

Legal disclaimer

The matters contained herein are intended to be for general information purposes only. This blog does not constitute legal advice, nor is it a complete or authoritative statement of the law in England and Wales and should not be treated as such. Whilst every effort is made to ensure that the information is correct, no warranty, express or implied, is given as to its’ accuracy, and no liability is accepted for any error or omission. Before acting on any of the information contained herein, expert legal advice should always be sought.