When someone dies, their debts don't die with them. They have to be paid out of the person's estate.
If you are administering an estate, you must make sure you have paid all the debts before you pay the beneficiaries. If you are not sure what the debts are, you need to advertise in the London Gazette and a local paper for two months for anyone who may have a claim on the estate, and then wait two months before paying the beneficiaries. The London Gazette is a weekly government publication that contains various legal notices (see 'Further help' for its phone number). You could become liable (responsible) for the debts if you pay the beneficiaries without having cleared all the debts first. You may also have to submit a tax return for the deceased person.
If there is not enough money to pay for all the debts, they must be paid in a particular order. If the dead person owned a mortgaged property, the debt to the bank or building society is first to be repaid. After this, you need to pay:
- the funeral expenses and 'testamentary' expenses (those to do with dealing with the will);
- the Inland Revenue (income tax and inheritance tax);
- Customs and Excise;
- Social Security (including refunding any over-payment of benefits);
- unpaid pension contributions or wages.
If all the debts can be paid, but there isn't enough money left to pay everything set out in the will, the legacies (those where a specific amount is mentioned) will be paid first, and other people mentioned will get what is left over.
If there is not enough to pay all the legacies, the people entitled to the legacies will get a proportion of what they have been left, depending on how much money is available. The other people mentioned in the will who are supposed to get the remainder will get nothing.
