Paying a deceased relative’s debts

When a person dies someone needs to sort out their affairs.  Very often responsibility for doing this falls on the person’s relatives, either because they have been named as an executor in the will or because they have been given permission from the Probate Registry where no will exists.

Paying for the funeral and settling any debts owed will be high on your list of priorities, but how do you know who to pay first and what to you do if your loved one’s money is tied up in property and investments? Pam Hughes, wills and probate expert with Mooney Everett Solicitors in Ormskirk, Lancashire explains the basics.

The funeral

Funeral costs should be paid out of any money left by your relative or by a pre-paid payment plan or insurance policy if one is in place.  Where no plan or insurance exists, or where the bulk of your relative’s money is tied up, it will usually fall on family members to cover the costs initially and to then claim reimbursement from the estate when cash becomes available.

Inheritance tax

In England and Wales, inheritance tax must be paid by the end of the sixth month following the date on which your relative died.  It must also usually be paid before a grant of probate or letters of administration are issued by the Probate Registry giving permission for your relative’s assets to be collected in or sold, debts to be settled and payments to beneficiaries to be made.

It is important to check whether your relative has arranged to settle any inheritance tax directly, for example by taking out an insurance policy specifically for this purpose.

It is also important to appreciate that in some instances it may be possible to pay inheritance tax in installments.  This will be the case if, for example, most of your relative’s money is tied up in their home which will need to be sold.

Interest will be charged when installment payments are selected.  Interest will also be charged where any tax due is paid late.


Debts need to be settled according to a strict order of priority.  First in line are secured debts, such as a mortgage or secured personal loan, followed by funeral costs and the expenses associated with dealing with the deceased’s affairs (known as estate administration fees).  Then come unsecured debts, such as unsecured loans, credit card balances and utility bills.

To ensure all accounts are settled, it is important to find out exactly who your relative owes money to.  To do this it is usual for the person dealing with the estate to ask a solicitor to advertise the fact that the person has died and to ask potential creditors to come forward with details of what is outstanding.  Failing to advertise in this way could result in the executors or administrators of the estate facing a claim from the creditors if they have already distributed the estate by the time details of the debt become known.

If you need help administering the estate of someone who has died, please contact Pam Hughes on 01695 574111 or email email hidden; JavaScript is required.

The contents of this article are for the purposes of general awareness only.  They do not purport to constitute legal or professional advice.  The law may have changed since this article was published.   Readers should not act on the basis of the information included and should take appropriate professional advice upon their own particular circumstances.

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