I recently blogged about what happens to a property held in joint-tenancy when, after death, the deceased individual’s estate is pushed into bankruptcy. While in that instance the surviving joint-tenant will likely receive the property free and clear of the bankrupt estate, the question remains of what impact an estate being pushed into bankruptcy has on those who are left behind.

On this topic, several people have recently posed to me the same question. Can you inherit the debt of those close to you?

As an article recently published by the Financial Post correctly points out, under normal circumstances, the responsibility to pay a deceased individual’s debts are held by the deceased individual’s estate and no one else.

This said, as one of the responsibilities of the Estate Trustee is to pay all of the debts and liabilities of the deceased prior to paying out the bequests, in the event that there are insufficient assets to cover all debts, the entire estate could be used to satisfy the debts and no bequests would be paid out.  While the beneficiaries of the estate may not receive any bequests, they will not themselves become liable to repay the deceased individual’s debts.

As the article is quick to point out, should the debt be jointly held between the deceased individual and another individual (i.e. a joint credit card), this debt will still be the responsibility of the surviving individual.

So, in summary, under normal circumstances debt cannot be transferred to those who are left behind. While any debts of the deceased individual will need to be paid before any bequests are paid out, should there be insufficient assets in the estate to satisfy all debts, the debt does not become the responsibility of anybody else.

Thank you for reading.

Stuart Clark