General liability
Debts do not end when someone dies. Instead, they must be paid off by the executor of the estate, using the money and other property left behind when the debt owner dies. Any assets in the deceased’s estate are first used to pay the funeral expenses and any costs that were incurred when they were dying, known as ‘deathbed expenses’. The rest is used to pay off debts, then the beneficiaries of the estate.
If there is not enough money to pay off the deceased debts in full, the estate is effectively insolvent. Money cannot be paid to beneficiaries in the will until all remaining debts are paid.
If someone in financial difficulty dies, their spouse, partner or family member may be concerned that they will be responsible for their debts. This is not the case as no one else is required to pay their debts unless they are jointly liable for the debt – eg, if they had a joint loan or they were guarantor.
A debt adviser should look at all the debts and check liability.