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How To Deal With Debts After Death?

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As like the assets of a person are distributed after his/her death, the liabilities or debts of the person also need to be paid off. But, there is not any certain way to pay off the debts of a deceased person like the asset distribution as per the will (a Will or testament is a legal document in which the testator expresses his intention or wish to distribute the property after his/her death) created when he/she was alive.

The heirs of a deceased are not legally responsible for paying off the debts, though it is their moral duty. However, the creditors move on to the spouse, heirs and relatives, expecting them to clear the debts of the dead person. Hence, to avoid such circumstances, a person called an executor or administrator will be appointed to take care of the estate and pay off the debts.


What Is An Estate?

Estate is the property, money, investments, assets, insurance and belongings of the deceased person. The estate will be used to settle the debts by the administrator or executor. After settling the debts, the remaining will be distributed to the heirs as per the will.

Who Is Responsible To Deal With Debts?

An executor is responsible for dealing with the debts. If the estate of deceased person did leave a will and had mentioned about the executor, then he/she will be responsible. And if there is no will, an administrator will be appointed by the court to deal with the deceased’s estate and debts. The executor is liable to pay interest on assets if he does not sort out and distribute the property within a year of death.

An executor who is in charge of the estate/property has to settle the outstanding debts, debts to creditors, taxes before distributing the assets to persons mentioned in the will.

What Is Probate?

Probate, also known as the grant of representation, gives a person the legal right to deal with the estate (Property, Assets, Investments, Belongings) of the deceased one. Probate can be applied by the person on his own or with the help of any solicitor, in case of any complications in the estate of the dead person.

The person or executor who applied for probate has the legal right to access the bank accounts, outstanding bill payments, sale of the property, etc., If there is a will, the executor can apply for probate while in the absence of a will, any legal heir or a close person can apply for probate to deal with the belongings. The probate office will conduct an interview within three weeks of receiving the probate application form.

How To Apply For Probate?

Duly filled in probate application form AP1 along with the Inheritance tax (Tax calculated on the value of property) form, the original will, death certificate and required application fee need to be sent to the local probate registry.

Guarantor And Cosigner

The guarantor is one who gives a guarantee for the loan amount taken by the borrower. The guarantor has to repay the loan amount, if the borrower fails to make the payment and the lender can sell the property of guarantor given as security by him.

The person who signs along with the original borrower for securing the debt is co-signer. The co-signer is legally responsible for repayment of debt.

Responsibility Of Spouse And Children

Spouse and children are not responsible for the debts of the deceased spouse or parent, unless they have co-signed any loan credit or loan agreement.


Insolvent means bankrupt. In case where the debts of a deceased person exceed his/her estate, then it is deemed to be an insolvent estate. In that case, the creditors will receive the minimum amount that is paid and close the account. No personal liability, if the estate is insolvent.

Going through a probate process would be wise since the Court takes the charge of paying the debt and minimizes it. The chance of over payment and fraudulent acts of creditors will be avoided since the payment is made by court legally, only after verifying all debts. This process includes court fees and probate charges.  

Joint Account Or Joint Property

Money in any joint account with other joint holders after death will be automatically moved on to the joint holders and cannot be included in the estate of deceased. But the share in joint property can be taken or added to the estate for the purpose of inheritance tax.

Money As Part Of Estate

Some of the money that can be added as part of estate of deceased, include-

  • Insurance Money
  • Any outstanding claims
  • Pension
  • Tax rebates
  • Capital invested in the business
  • Savings and investment

Bank Accounts

The cash in a bank account will be attached to the probate estate, if the account is solely in the name of the deceased and no intimation about that. But if the account is a joint account, then the other account holder automatically becomes the owner of the account.

Some Common Debts Paid After Death

Secured Debts – Secured debt means the debt attached with any asset as security. Secure debts are paid of at first before paying all other debts. If the secured debt is not paid, then the lender has the option to sell the asset mortgaged for availing the debt. Example: Mortgage Loans

Unsecured Debts – These debts are paid after secured debts are paid and if there is enough money left in the estate to pay the debt. Example: Credit cards

Credit Card – The unpaid balance of a deceased credit card holder will not pass on to others. Relatives, heirs or spouse are not responsible for the credit card outstanding balance of a deceased person, unless it is a joint account. The joint account holder is liable to pay off the outstanding balance of credit card even if all expenses were made by the deceased person.

Mortgage Loans – If the mortgage loan was taken jointly in the name of spouse, then the spouse is responsible for paying the loan after the death of a spouse.

Personal Loans – This will be repaid after paying all other debts.

Tax – Income tax on the income arrived or inherited to the heirs after death and estate tax on the value of the estate of the deceased need to be paid.

Steps Involved In Handling The Debts

Make A List Of Debts

First, make a list of debts outstanding for the deceased person by verifying all the documents and papers available.

Nature Of Debts

Second step is to check the nature of debts, whether it is a secured debt, unsecured debt, individual debt or joint account debt.

Proper Information To The Creditors

The creditors need to be intimated that the concerned person has died and the debts are being paid off with the estate of the deceased one.


If there is any insurance policy taken by the deceased person to settle the debts, then the  insurance claim can be used to pay off the debts.


The death of the concerned person and the efforts taken to pay the debts to creditors need to be published in a newspaper before distributing the assets in order to avoid the problem that may arise in the future; anybody can come with any claim later. Creditors can come with a claim within two months of the newspaper advertisement or notice as per law.

How LegalDesk Can Help?

There are many complications one may undergo in dealing with the debts paid after the death of a person. People can go with probate process or can take the advice of legal experts, which involves probate expenses, court fees and legal expert fees. But this can be done with less time and money by availing the help of

Prevention is always better than cure. The hassles of paying of the debts and dividing the estate among the heirs can be avoided, with the creation of a will. There are various benefits of making a will which also includes appointing a trustworthy person as your executor. Anybody with a property/asset, who is of sound mind and is above 18 years age holds the right to make a will. Moreover, with LegalDesk’s online template of Will, once can make a Will quickly and with zero hassles. We also help you in the process of registration. So, why not make a will now.

03 Jun, 16

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