This guide is maintained as a current resource for September 2026 and covers only the laws of England and Wales. Information is for general guidance, not legal advice. Consult a qualified solicitor for advice specific to your situation.
Comprehensive guide to dealing with debts in a will in England and Wales. Learn how outstanding debts are paid from an estate, the order of priority, executors' responsibilities, what happens with insolvent estates and common practical issues.
When someone dies, their estate - the total of their money, property and possessions - must be used to pay any debts they owed before any gifts under their will can be distributed. Understanding how debts are handled in estate administration is essential for executors, beneficiaries and those planning their own estate. This article explains what debts are, who is responsible for paying them, the legal process for settling debts from a deceased person's estate, the order in which different kinds of debts are paid, what happens if the estate cannot cover all debts, and common questions that arise in practice. The content reflects current practice in England and Wales and uses UK‑specific legal terminology.
1. The Legal Position: Debts of a Deceased Person
When someone dies, any debts they had do not simply disappear. Instead, the debts become a liability of the person's estate and must normally be repaid from the estate's assets before any beneficiaries named in the will receive an inheritance. This is part of the process of estate administration carried out by the executor named in the will (or an administrator appointed if there is no valid will).
The executor's role includes identifying the deceased's assets, identifying all known creditors, applying for probate (called a grant of probate in England and Wales) if necessary, and using estate assets to pay valid debts. Executors are not personally liable for the deceased's debts unless they have co‑signed for them or acted as a guarantor.
2. The Estate and the Executor's Responsibility
The estate includes:
- Cash in bank accounts
- Investments and shares
- Property and possessions
- Saleable personal items
The executor collects these assets and settles debts on behalf of the estate. If the estate requires it, the executor must apply for a grant of probate before they can access and distribute assets. In small estates, probate may not be necessary.
Executors should inform all known creditors of the death, and it is recommended to place a notice in The Gazette and a local newspaper to allow unknown creditors to come forward with claims against the estate. This helps avoid later claims after the estate has been distributed.
3. What Debts Must Be Paid From the Estate
All valid debts of the deceased are normally paid out of the estate. These can include:
- Unpaid utility bills and credit card balances
- Loans and personal overdrafts
- Mortgages and secured loans (secured against property)
- Council Tax or business debts
- Outstanding rent if applicable
Life insurance or certain payments, such as pensions in payment to a named beneficiary outside the estate, may not form part of the estate and therefore are not available to pay debts. However, this depends on how those benefits are structured.
4. Order of Priority for Paying Debts
There is a recognised priority in which debts must be paid from the estate. While exact rules can vary by circumstance, the typical order used by executors is:
- Funeral expenses and reasonable testamentary costs
- Secured debts (e.g. mortgage or secured loans)
- Priority debts (e.g. income tax, council tax arrears)
- Unsecured debts (e.g. credit cards, personal loans)
Secured debts are those tied to specific assets, such as a mortgage on a house. They are generally paid from the sale of the secured asset if necessary. Unsecured debts, like most consumer credit, are paid only from the estate if funds remain after priority and secured debts are satisfied.
5. Insolvent Estates: What Happens if There Aren't Enough Assets
An estate is insolvent when its assets are insufficient to cover all valid debts and liabilities. In that situation:
- Debts are paid in the legal order of priority (as above).
- If the estate runs out of funds before all debts are paid, lower‑priority debts remain unpaid and are effectively written off.
- Beneficiaries will not receive distributions under the will until debts are settled.
- Executors should not distribute assets or make payments to beneficiaries until the full debt position is clear, including allowing time for creditor claims.
Family members and other inheritors are generally not personally liable for the deceased's unpaid debts, except in limited circumstances where they were joint holders of the debt or provided a guarantee. For example, a joint credit card or a joint mortgage may pass liability to the surviving account holder.
6. Practical Steps for Executors Dealing With Debts
1. Identify all debts and creditors.
Executors should review the deceased's paperwork and bank statements and notify known lenders, utility providers and government departments of the death.
2. Place notices to creditors.
Placing a notice in The Gazette and a local paper gives unknown creditors (who may not be aware of the death) an opportunity to come forward with claims within a two‑month period.
3. Apply for probate if necessary.
If the estate requires probate, this must be obtained before accessing assets to settle debts.
4. Pay debts in the correct order.
Executors must follow the legal priority of debts when paying from the estate. They should hold sufficient funds until higher‑priority claims and costs are covered.
5. Avoid premature distribution.
Beneficiaries must not receive any inheritance until all realistic creditor claims have been resolved and the priority order has been complied with.
7. Common Issues and Questions
Does debt die with the person?
No. Debts are repaid from the deceased's estate and must be settled before any distribution of assets. If there are insufficient assets, some debts may remain unpaid, but they generally do not transfer to heirs unless they were joint account holders or guarantors.
What if there is no will?
If there is no valid will, an administrator appointed by the court deals with the estate and debts according to the intestacy rules. The same principles of debt repayment apply.
What about secured property?
If a property is secured with a mortgage, the mortgage debt may need to be repaid from the estate. If the property was co‑owned and passes outside the estate (for example, joint tenancy), the surviving owner may become responsible for any remaining mortgage balance.
Key Takeaways
In England and Wales, debts left by someone who has died must be settled from their estate before any gifts under the will are distributed. The executor or administrator is responsible for identifying assets and liabilities, applying for probate if needed, and paying debts in a recognised order of priority, starting with funeral expenses and secured liabilities. If the estate lacks sufficient funds, lower‑priority debts may remain unpaid, and beneficiaries will not receive their inheritance until all debts are addressed. Family members are generally not personally liable for the deceased's debts unless they were joint debt holders or guarantors. Executors and personal representatives should advertise for creditors, apply for probate where necessary, and ensure all realistic debt claims are resolved before distributing assets to beneficiaries.
