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Things to know about debts during estate administration

The executor of an estate in British Columbia has many responsibilities, all of them important. One of the early steps of estate administration involves settling the debts of the estate. How this is done, and what obligations the executor has to creditors, may be unclear to some people taking on the role.

It is important to know that a debt cannot be willed or passed along to a particular individual in the way that an asset can. A debt is the sole responsibility of the person or persons who incurred it. Even if the testator's spouse is still alive, if his or her name is not signed on a contract, that person is not responsible for settling the debt.

In the case of a credit card, it may be worth checking for insurance on the card. Some people pay a fee in order to have their balance covered in the event of their demise. If not, it is up to the estate to pay the bill, as will be the case with all other debts. 

Before the estate can be distributed to the beneficiaries, the liquid assets of the estate must be used to pay off creditors. If these are not enough, assets may be sold in order to make payments. Only once all debts are paid can the remainder be passed along. If, however, the estate runs out of money before all creditors have been satisfied, the remaining debt cannot be collected. It will likely be necessary to provide proof the estate does not have the resources to settle with any creditors left unpaid.

Financial matters make up a lot of the estate administration process. Those people who are not accustomed to these kinds of affairs may find them complicated and frustrating to wade through. It may be easier to seek the assistance of a British Columbia attorney who is practiced in the details of estate law.

Source:, "Inherited Debts or Debts after Death", Feb. 7, 2017

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