Executor Responsibilities in Regard to Debts

From: Assured Probate Services 

An executor’s role is to identify estate assets, settle liabilities and distribute remaining property/money in accordance with the will or rules of intestacy.

A person’s debts become the responsibility of the estate upon death and do not simply die with them as is a common misconception. Executors must ascertain what outstanding debts the deceased had at the time of death such as loans and credit card bills.

In order to deal with debts efficiently, executors must contact creditors promptly to inform them of the death. It is likely that the debts cannot be settled until the grant of probate has been obtained and estate assets have been collected. The creditors may have been chasing their money for some time, but it is always helpful for executors to maintain contact with creditors and provide regular updates as they are more likely to respond leniently. All creditors must be paid in full before the estate is distributed to the beneficiaries.

It is important that executors take precaution when administering the estate as failure to pay a creditor can lead to creditors bringing a claim against the executors. This is even if the executor did not know the debt existed.

For estates where there are insufficient funds, the debts must be paid in a specific order and executors must comply with these rules to avoid claims against them. The order of priority is as follows:

1. Secured creditors
2. Funeral expenses
3. Testamentary expenses
4. Preferential creditors
5. Unsecured creditors
6. Interest due on unsecured loans
7. Deferred debts, for example between members of the family

It is vital that executors thoroughly ascertain the debt position of the estate and seek adequate protections when administering the estate. At APS Legal and Associates, as we are familiar with the administration process and have knowledge of settling liabilities, we can ensure that executors are protected.

Could you do with some FREE, sound advice on:

• Writing a Will – What do I need and how much does it cost?
• Creating Lasting Powers of Attorney – If I was incapacitated who can act on my behalf?
• Property Protection Trusts – Can these really save Care Home Fees?
• Pre-Paid Funeral Plans – With so many to choose from how do I decide which plan is best?

There is so much confusion on these vital areas of estate planning, that sometimes just a chat with an expert in the field can clear up misunderstanding and set out the way ahead, without all the legal jargon.

Steve Worsfold
Affiliate Member of the Society of Will Writers
Advising on Wills/Trusts/Probate/Powers of Attorney

Mobile: 07734 744886
Office: 01903 533681
Email: steve@sussexwillwriters.co.uk
Website: www.sussexwillwriters.co.uk

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