Dealing with debts after someone dies

Letters about money often keep arriving after someone dies, and it’s natural to worry that you’ll have to pay. In most cases you won’t. Debts are paid from what the person left, and family members are only liable in specific situations. This guide explains who pays, how joint accounts and mortgages work, and what happens if there isn’t enough money.

Key points

• Debts are paid from the estate, before anyone inherits.
• Family members are not usually liable unless the debt was joint or they were a guarantor.
• Joint accounts usually pass to the survivor in England, Wales and Northern Ireland; Scotland is different.
• Secured debts, like a mortgage, are tied to the property.
• If there isn’t enough money, debts are paid in a set order, starting with reasonable funeral costs.
• Executors can be personally liable if they pay out the estate too early.

Who pays: the estate

The estate is everything the person owned: money, property, possessions and investments, minus what they owed. The person who deals with it, the executor (or administrator if there’s no will), uses the estate to pay debts, bills and taxes before sharing what’s left.

To deal with bank accounts and property, the executor usually needs a grant of probate or letters of administration (or confirmation in Scotland). See do I need probate?

Are family members liable?

nidirect also makes the point that you aren’t automatically responsible for a husband’s, wife’s or civil partner’s debts just because you were married.

If a creditor asks you to pay a debt that was only in the person’s name, you don’t have to pay it yourself. Ask them to deal with the executor.

The person’s bank accounts

When a bank is told about a death, it will usually freeze accounts in the person’s sole name, which stops payments going out. The money stays in the estate until the executor has authority to collect it. You can tell several banks, building societies and other firms at once with the free Death Notification Service.

Some useful points:

• Funeral bills: many banks will pay the funeral director’s invoice directly from the person’s account, if there’s enough money.
• Small balances: banks may release small amounts without a grant. Limits vary by bank; nidirect says that in Northern Ireland a grant may not be needed where the money is small, usually £20,000 or less.
• Joint accounts: in England, Wales and Northern Ireland the balance usually passes straight to the surviving holder. In Scotland, for married couples and civil partners, half is presumed to belong to the person who died, and the executor may need to account for it.

Mortgages and other secured debts

A secured debt is tied to an asset, usually the home. If the person had a mortgage in their sole name, the lender will either want it repaid, often when the home is sold, or ask whoever inherits the property to take it on.

Check for a life insurance, endowment or mortgage protection policy, which may pay off the mortgage. Other loans sometimes had payment protection insurance that pays out on death.

Cars and goods on hire purchase or some car finance agreements may belong to the finance company until they’re paid off, so check the agreement before selling or giving them away.

Dealing with creditors, step by step

1. Make a list of every debt and bill. Post, bank statements and paperwork in the home are good places to look.
2. Write to each creditor with a copy of the death certificate and the executor’s details. Ask for the balance on the date of death.
3. Check for insurance that might pay off a debt.
4. Advertise for unknown creditors. In England and Wales, GOV.UK advises placing a notice in The Gazette, giving creditors two months to claim. Citizens Advice also suggests a notice in a local paper.
5. Wait before sharing out the estate. If you distribute assets early and a debt appears, you may have to pay it yourself.
6. Pay in the right order, and keep a record of every payment.

If there isn’t enough money: insolvent estates

An estate is insolvent when its debts are bigger than its assets. The executor must then pay debts in a legal order of priority.

In England and Wales, secured creditors, such as a mortgage lender, are paid from the asset their debt is secured on. The rest of the estate is then used in broadly this order, as set out in GOV.UK’s guidance for official receivers:

1. Reasonable funeral, testamentary and administration expenses (such as probate and legal costs).
2. Preferential debts, a small group of debts given priority by law.
3. Ordinary unsecured debts, such as credit cards, personal loans and most bills.
4. Interest and deferred debts.

Each group is paid in full before the next gets anything. If there isn’t enough for everyone in a group, they share what’s available. Whatever can’t be paid is usually written off.

Get legal advice before paying anyone if the estate might be insolvent. Citizens Advice warns that executors are responsible for getting it right and might have to pay for mistakes. Scotland and Northern Ireland have their own rules on the order of payment, so take advice there too.

How the rules differ across the UK

For more on how debts are handled in England and Wales, including planning ahead in your own will, see SwiftWill’s explainer on what happens to debt when you die.

Getting help

Dealing with creditors while grieving is hard. Free, confidential help is available from Citizens Advice, StepChange and, in Northern Ireland, Advice NI. The government-backed MoneyHelper service also has guidance on debts after a death. If the estate is complicated or insolvent, speak to a solicitor.

Next steps

• Find out if you need a grant: do I need probate?
• Worried about the funeral bill? See help paying for a funeral.
• Sorting out the home: clearing a home after a death.
• Tell government departments at once with Tell Us Once.
• Keep on top of everything with our when someone dies checklist.