Are debts paid before anyone inherits?
Yes. Everything the person owned is available to pay their debts and liabilities (Administration of Estates Act 1925, s.32). GOV.UK tells executors to pay the debts and settle the taxes first, including unpaid bills, personal taxes and overpaid benefits, and to distribute the estate only when the debts are paid or there is clearly enough to pay them.
Does your family inherit your debts?
No. Debts belong to the estate, not to relatives. Children, a spouse or parents do not become liable for a credit card, personal loan or utility bill in the person's sole name. If the estate runs out, creditors receive only what the estate can pay. The exceptions are debts someone else signed up to.
| Debt | What usually happens |
|---|---|
| Credit card, loan or overdraft in the person's sole name | Paid from the estate; not passed to family |
| Joint loan or joint overdraft | The surviving borrower usually remains liable for the whole debt |
| Debt with a guarantor | The guarantor may be asked to pay under the guarantee |
| Mortgage | Stays secured on the property; the lender's security is protected |
| Overpaid benefits | Repaid from the estate |
| Student Loans Company loan | Cancelled once the SLC receives evidence of the death |
On joint accounts, Barclays, for example, says an overdraft becomes the surviving holder's (checked 24 September 2026). The Student Loans Company needs the customer reference number and a death certificate or coroner's certificate.
What happens if the estate cannot pay all its debts?
An estate that cannot pay its debts in full is insolvent, and a strict order applies. Under the Administration of Insolvent Estates of Deceased Persons Order 1986, article 4, the reasonable funeral, testamentary and administration expenses come first; after that, the rules used in bankruptcy decide how secured, preferential and ordinary creditors are paid. An executor who pays creditors in the wrong order can end up personally liable, so take advice from a solicitor or insolvency practitioner before paying anyone.
How do executors protect themselves from unknown debts?
They advertise for creditors before sharing out the estate. GOV.UK advises placing a notice in The Gazette that gives creditors two months to claim, and not distributing until the two months are up; if you distribute early and a debt cannot be paid, you may have to pay it yourself. Under section 27 of the Trustee Act 1925, an executor who gives the notices and waits is not liable for claims they had not been told about. Where the estate includes land, the notice also goes in a newspaper circulating in that area.
What should an executor do about debts?
The executor works through the debts in this order:
- List every debt, using statements and post.
- Tell each creditor about the death and ask for the balance at the date of death.
- Place the creditor notices and wait at least two months.
- Pay the debts from estate money, not from your own account.
- Take advice if the debts may be more than the estate is worth.
The executor checklist covers the full process, and bank accounts after a death explains how accounts are released. If the estate needs a grant first, see probate.
How can you make your own debts easier to deal with?
Keep a list of your accounts, loans and credit cards somewhere your executor can find it, and make a will that names who deals with your estate. The executor handover helps you record where things are, and you can make your will with SwiftWill for £35.
Sources
- Administration of Estates Act 1925, section 32
- Administration of Insolvent Estates of Deceased Persons Order 1986, article 4
- Trustee Act 1925, section 27
- GOV.UK: Dealing with the estate of someone who has died (settling debts and taxes; distributing the estate)
- GOV.UK: Student loan cancellation if a customer dies
- Barclays: bereavement (example of joint overdraft rules)
Sources checked 24 September 2026.