It is not unusual for some people to think that when they die their debts will die with them. This may be the case if they have no assets, savings, investments or insurances. If you do have assets then these are likely to be sold to clear any debts. Debts in joint names with your partner for example are payable after your death. But they become the responsibility of your partner.

What is the estate?

When someone dies, their assets, made up of their money or savings including any payouts from insurances and investments and the value of any property and possessions add together to make up the worth of that person, referred to as their estate.

If a will has been made then someone would often have been named as executor, usually a relative, friend or solicitor, who will take charge of the deceased's person's affairs.

If no will had been made then the person is deemed to have died intestate. This means that an administrator will need to be appointed to carry out the same duties as the executor but in either scenario the first undertaking is to get the estate valued and for any outstanding debts to be repaid. 

What is a joint liability?

Unless any of your debts are in joint names, you will not be responsible for any wife's, husband's or civil partner's debts on their death.

However in the case of a debt in the name of more than one person, typically a mortgage held in the husband and wife's names, and any loans secured on the house or unsecured personal loans and overdrafts, each named person is liable for the whole debt. 

Who gets what?

Before any monies can be paid to people named in the will the executor has to pay any of the deceased's debts in a strict order of priority;

• Funeral and testamentary expenses (costs for dealing with the estate)
• Mortgage or secured loan on a property
• HM Revenue and Customs
• Department of Work and Pensions, in case there are any overpaid benefits
• Any unpaid pension contributions or wages.

If all the debts can be paid but there isn't enough money left in the estate to pay what is set out in the will, for example legacies, where a specific amount is to be paid to a person first, then the other named people mentioned in the will receive what is left over.

If there is not enough to pay all the legacies then those owed will get a proportion of what was due, depending on how much money is available in the estate. Any other people mentioned in the will, who were due the remainder, will end up with nothing.

It is important to remember that as executor or administrator you may be asked to submit a tax return for the person who has died and you could be liable for any debts if you pay the beneficiaries without clearing all claims and debts first. 

Can I be forced to sell my home?