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The question of what happens to debts when someone dies is the subject of more confusion on the Internet than possibly any other topic related to probate.

Firstly, it is important to understand that all debts owed by the deceased, whether jointly or solely, ultimately have to be repaid. The only exception to this is where the value of debts in the sole name of the deceased exceeds the total value of the deceased's assets and share in joint assets. In other words if the estate is insolvent this is equivalent to bankruptcy and creditors will not receive all of their money. In this case there will be nothing to distribute to beneficiaries.

Sole Debts

A debt in the deceased's sole name such as an overdrawn bank account or a car loan will always have to be paid from the estate's assets. If there are sufficient assets in the deceased's sole name, or held as Tenant in Common, then the executor or administrator will arrange for the debts to be paid out of the proceeds from these assets.

If there are not enough assets in the deceased's sole name then the debts will be payable out of joint assets held as Joint Tenants. The Personal Representative cannot force the other Joint Tenant to pay these debts. It would be normal, however, for the Personal Representative to be involved. Ultimately the creditors can apply to the count for an Insolvency Administration Order (within 5 years) against the other Joint Tenants to force the sale of the joint asset and the repayment of the debt.

Joint Debts

Joint debts might be subject to a written agreement, as will be the case with loans for instance, but they will invariably entail "joint and several liability". This means that on the death of one debtor the debt becomes the sole responsibility of the other joint debtor. The debt is accounted for in Inheritance Tax calculations but does not form part of the estate for probate purposes and is not repaid by the Personal Representative out of sole assets.

Household debts such as council tax and water rates are joint debts and become the responsibility of the other householders even if their names do not appear on any documents.

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