It is important essential to understand what happens to any debt that someone leaves after their death. If the person managing the estate (the personal representative/s i.e the executor/s or administrator/s) fails to understand the different types of debts and what happens to them, leaving them at risk could mean the person managing the estate (the personal representative/s i.e the executor/s or administrator/s) risks of personally inheriting the debt and becoming responsible to pay off all debts of the deceased person.
It is a commonly held misconception that debts do not die with the deceased person. There is a clear strict order of priority of payment of debts and the debts must be paid before any money is paid out to any beneficiary. Provided this order is followed then there is no personal liability on the person/s administering the estate of the deceased person.
In many cases, any debts are quite small in relation to the value of the estate and will present no difficulty to the personal representative. However, if there are many debts, some are secured (e.g. a mortgage on a property) and it seems possible that there may not be enough money in the estate to pay all the debts, i.e. the estate may be insolvent, the personal representative should proceed with extreme care before doing any work on the estate at all. Please read all of this section before considering the options that are explained below. It is especially important to be aware that if a family member pays for the funeral with their own money, it may be difficult to recover this money from an insolvent estate.