The legal priority order for paying estate debts in England and Wales. Secured debts, funeral expenses, unsecured debts, and how to protect yourself as executor.
This guide is part of ProbateHelp's Probate Process guide cluster. Estimated reading time: 18 min.
Frequently asked questions
Am I personally liable for the deceased's debts as executor?
Not normally. An executor is not personally liable for the deceased's debts simply by virtue of being executor. However, if you distribute the estate to beneficiaries before paying all debts, and a creditor later comes forward, you may be personally liable for the shortfall. This is called an 'executor's devastavit' (wasting of the estate). The protection is to pay all debts before distributing, and to place a statutory advertisement in The Gazette to flush out unknown creditors.
What if the estate cannot pay all its debts?
If the estate is insolvent (debts exceed assets), you must follow the statutory order of priority strictly. Secured creditors are paid first, then funeral and administration expenses, then preferential debts, then unsecured creditors. If there is not enough to pay all unsecured creditors in full, they are paid proportionally (pari passu). Beneficiaries receive nothing until all creditors are paid. If the estate is insolvent, consider taking legal advice — the administration of an insolvent estate follows different rules.
What is a statutory advertisement and do I need one?
A statutory advertisement is a notice placed in The Gazette, with a local newspaper notice recommended where the estate includes property in England and Wales. Section 27 gives creditors a minimum of two months from publication to come forward. After that period, the notice can protect you from personal liability for unidentified creditors who did not respond. It does not protect you against debts you already know about.
What happens to a mortgage when someone dies?
A mortgage is a secured debt and must be paid from the estate. If the property is being sold, the mortgage is repaid from the sale proceeds. If the property is being transferred to a beneficiary, the beneficiary may take over the mortgage (subject to the lender's agreement) or the mortgage may be repaid from other estate assets. If the mortgage has a life insurance policy attached to it, the insurance may pay off the mortgage — contact the insurer to find out.
Can I pay funeral expenses before other debts?
Yes. Funeral expenses are a priority debt and rank above most other debts in the order of priority. You can pay reasonable funeral expenses as soon as funds are available, even before other debts are settled. 'Reasonable' is not defined in law, but courts have accepted expenses including the funeral service, burial or cremation, a headstone, and a modest wake. Extravagant expenses may be challenged by creditors.
What if a creditor contacts me after I have distributed the estate?
If you placed a statutory advertisement and waited the required period from publication, you may be protected against personal liability for unidentified debts that were not notified to you. If you did not place an advertisement, you may be personally liable. If the creditor's claim is valid and you have already distributed the estate, you may need to recover funds from the beneficiaries, which can be difficult in practice.