Debts come out of the estate first
When someone dies, everything they owned and everything they owed is added up. The debts are paid from the estate — before any beneficiary receives a penny — in a set legal order: funeral and administration costs, secured debts, then the remaining priority and unsecured debts such as credit cards, loans and utility bills. Only what is left passes to the people named in the will.
What your family does not inherit
Personal debts die with you. Your children, spouse or parents cannot be billed for your credit card or personal loan from their own money, and they are under no obligation to pay anything beyond what the estate contains. If the estate is too small to cover the debts, the remainder is written off — creditors cannot pursue the family for the shortfall.
The exceptions: joint debts, guarantees and mortgages
- Joint debts — a joint loan or overdraft passes to the surviving account holder, who becomes fully responsible for the whole balance.
- Guarantees — anyone who guaranteed one of your loans remains on the hook for it after your death.
- Mortgages — the debt stays attached to the property. Whoever inherits the home inherits the problem: keep paying, sell, or arrange to take the mortgage over with the lender.
What executors do about debts
The executor gathers and values everything, keeps proper estate accounts, and pays creditors in the correct order before distributing anything. To protect themselves from unknown creditors, executors commonly place section 27 Trustee Act 1925 notices in The Gazette and a local paper, giving claimants a deadline to come forward. Most estates also need the Grant of Probate — see how probate works; the court fee is £526 for estates over £5,000 — before banks release larger balances (what happens to bank accounts after death). If the estate looks insolvent, executors should take professional advice before paying anyone: the order of payments is strict, and personal liability for getting it wrong is real.
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