It is very distressing when somebody close to you passes away. Unfortunately after death, the mail and bills continue to arrive.
Who has the responsibility to see these bills get paid?
In short, a deceased person is responsible for their own personal debts incurred while they were alive. This means that any utilities, mortgages, credit cards or personal debt in the sole name of a deceased person is their responsibility and upon their death becomes the responsibility of their estate. The estate’s executor steps into the shoes of the deceased person and uses the deceased’s funds to pay all debts they have prior to paying out any of the gifts in accordance with their Will.
However, in circumstances where a debt is jointly held, the surviving person will still be responsible for the debt until it is paid out. This is particularly important in circumstances where a deceased person does not have the capacity to meet their debts as the other person will be pursued to ensure payment.
In circumstances where a deceased person does not have sufficient assets to meet their debts an Executor or other third party is not responsible to pay these debts. In this circumstance a deceased person’s Estate is considered insolvent and is treated in a similar fashion to any other person who is unable to pay out all of their liabilities.
If you as an Executor or a third party and wish to pay any debts of a deceased person you are able to pay these items and be reimbursement from the Estate for any funds that you pay on that person’s behalf. For more information please contact our Estates team on 03 5445 1000.