Dealing with the finances of someone who has died

The best way to start is by making a list of all the debts you can find, noting how much is owed on each of them and whether the debts are individual or joint, secured or unsecured and if a guarantor is named on any of them. Understanding how each debt is set up will help you to work out how to pay them and what should be paid first.

Individual debt

If the debt was an individual debt, so only in the name of the person who has died then this must be paid off by their estate, and not by a surviving spouse, civil partner or relative (unless they provided a personal guarantee). If there isn’t enough money in the estate then the debts will be written off.

Joint debt

If the debt is a joint debt, so is in the name of two or more people (including the person who has passed away) then usually the outstanding debt will pass to the surviving people. So for example, if you had a loan in both of your names of the person who has died, the responsibility to pay it will pass to you.

Secured debt

Things get a little more complicated if the debt was a secured debt, (a debt that uses physical assets, such as property, as collateral), as how the assets are owned will change who is responsible for paying the debt. Generally, if the asset was owned solely in the name of the person who has died, its value will be added to the estate and will need to be used to pay back the debt. If the asset was jointly owned by two or more people then it’s value won’t usually be added to the value of the estate.

If the secured debt was secured against a property, how the property was owned will make a difference to if the property’s value will be added to the estate to pay back debts or not. Usually joint property ownership will be arranged as either tenants in common or joint tenants, each of which changes how a debt should be paid:

Tenants in common: When you bought the property together you will have outlined the specific share of the property that each of you own. This will mean that the share of the property of the person who has died will be taken into account when paying back debts.

Joint tenants: If you were joint tenants, you and the person who has died both own 100% of the property, and if either person dies, the ownership automatically passes the the surviving tenant. This means that the value of the property won’t be taken into account when paying back debts.

Unsecured debt

Unsecured debts are a lower priority debt than secured debts, so if the estate runs out of money on more important debts, then the creditor can’t claim this money from you.

Of course there may be some undisclosed debts that you aren’t aware of that will also need to be paid. The best way to find out if there are other debts to be paid is by issuing a death notice in a local newspaper or in The Gazette, which is one of the government’s official journals of records.This gives the person’s creditors time to come forward with any claims. The creditors then have two months and one day to submit a claim.

Author: wpadmin

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