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British Columbia estate administration: Debt and death

Like it or not, debt is a big part of modern life. Most homeowners carry mortgages, many people have car payments and some people carry balances on their credit cards. But when it comes to estate administration in British Columbia, what happens to all the debt -- and rewards in some cases -- after a person dies? Most people believe their loved ones will be on the hook for their debts, but that's not the case.

The fact is that any outstanding debt will be paid from a deceased person's estate before beneficiaries receive what's left. There is one exception. If someone has signed on as a guarantor of someone's debt, that person would be held responsible. There are some instances, too, when an asset cannot be touched by a creditor. These include any life insurance policies or a Registered Education Savings Plan opened for someone.

If the estate has no assets at all, the executor would do well to seek the counsel of a lawyer. An executor is not liable for the debts, but if he or she distributes any money before any debts are paid, then he or she could be held accountable for that money until debts are paid if the deceased person's estate files for bankruptcy. But filing bankruptcy may be unnecessary unless there are significant assets yet still not enough to clear all the debts.

In these kinds of estate administration instances, a British Columbia lawyer with experience in wills and estates law could offer assistance by drafting a letter to creditors telling them the debtor is deceased. A copy of the death certificate will also be necessary. This may be enough to prevent creditors from pursuing the debt.

Source:, "What happens to debt (and rewards) after you die?", Aaron Broverman, Accessed on Oct. 7, 2017

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