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The estate

A person's estate is made up of their cash (including from insurance) and investments, property and possessions.

After someone dies their estate is handled by one or more 'executors' - or an 'administrator' if there wasn't any will. These are usually a relative or friend and/or a solicitor.

If the estate's worth more than a certain amount the executor or administrator will need special permission - called 'probate' or 'letters of administration' - to be able deal with the person's affairs. This includes paying off their debts.

• What is probate? (Government, citizens and rights section)

What happens if there's not enough money to pay off all debts?

In this case, the estate has to pay off any outstanding debts in a set order before anything is given to people named in the will, or until the money runs out.

• Dealing with a deceased person's money and property

Debts if you owned a home together

If you jointly owned your home and there's not enough money elsewhere in the estate to pay off the deceased person's debts, there is a chance that your home would have to be sold. Your options to avoid a sale depend on whether you owned it as 'tenants in common' or 'joint tenants'.

'Tenants in common'

If you were ‘tenants in common’, each of you owned a stated share of the property. The share belonging to the person who has died becomes part of their estate and goes to whoever is mentioned in their will. But if there are outstanding debts these must be paid first from that share.

To avoid a sale of the home, you and/or anyone due to inherit the second share will need to try to negotiate with those owed money ('creditors') and find the necessary money.

'Joint tenants'

If you were ‘joint tenants’, you owned the whole property together and the deceased person's share passes automatically to you.

But even though it's now in your estate, you can't ignore the debts. Creditors can apply for an 'Insolvency Administration Order' within five years of the death. This can have the effect of dividing the property in two and can force a sale. So it's in your interest to try to come to an agreement with people who are owed money, and try to pay them yourself.

Information as to whether you own the property as 'tenants in common' or 'joint tenants' may be shown in the Transfer or Lease by which you acquired the property or in a Trust Deed or in a Will. The land register may also provide a clue, but Land Registry cannot advise you on which kind of ownership you have chosen.

• Check your property ownership details with the Land Registry Opens new window

How different debts are paid off

Mortgages

If the mortgage lender required life insurance this may pay off the full amount of the loan. If there isn't any insurance - or if there were second mortgages not covered by insurance - the property may have to be sold.

Rent arrears

If you are a joint tenant in rented property, you must pay off any rent arrears. You are not liable for the previous rent arrears if you take over a tenancy.

Water rates

Anyone still living in the house is responsible for any arrears and for ongoing charges, even if their name isn't on the bill.

Council Tax

Anyone still living in the house is responsible for any arrears and ongoing charges, even if their name isn't on the bill. (Although there is a 25 per cent reduction for being the only adult in the house.) Council Tax stops if no one's living in the house.

Fuel bills

If you've been living in the property jointly you may be liable for fuel bill arrears. Contact National Debtline for advice - details below.

Hire purchase (HP agreements)

The buyer doesn't own the property until the last payment has been made. But if over one third of the agreement has been paid, the seller needs a court order to get the goods back.

Before returning goods or making payments, check to see if there was a payment protection plan. Also contact National Debtline for advice.

• Mortgage arrears or payment difficulties

• Council Tax arrears

• Hire purchase and debt

Personal loans, credit cards and credit debt

Repayment of these debts must wait until others have been settled. If cards are held jointly, any debts will be the joint holder's responsibility - but check to see if you're covered by a payment protection plan.

Bank account

If this was in the person’s sole name, no one will be able to touch the money until the estate is sorted out. If you had a bank account in joint names, you can still usually use the account.

Savings

If you think there may be savings in a lost bank or building society account, a search can be carried out by using a free application online.

• My lost account Opens new window

Tax debts and overpaid benefits

Any tax owed or overpaid benefits or pension would be paid out of the estate. To prevent benefits overpayments and check if tax is owed contact the relevant office as soon as possible. You'll find contact details on relevant paperwork, or you can search online.

• Sorting out someone's tax affairs after they die

• Tax and other debts owing to HM Revenue & Customs

• Find your Tax Office through an HMRC Enquiry Centre Opens new window

• Who to contact at The Pension Service

• Find your pension centre Opens new window

• Pension Tracing Service - trace a personal or company pension scheme

Checking for insurance to cover debts

Always check carefully to see if the deceased person's debts are covered by:

• Dealing with finances after a death: a checklist

• Documents and information needed when someone dies

More useful links

• Where to get advice and support on debt

• What to do about debt when someone dies Opens new window

• More about dealing with someone's estate from Age Concern Opens new window

• Community Legal Advice - Wills and Probate Opens new window

• 'Bereavement' benefits

• Funeral Payments

• Plan your way out of debt

• Paying for a funeral

• Financial help for the bereaved

• Death and bereavement

Useful contacts

• Money, tax and benefits contacts