Q: My mother recently died in hospital, having been taken there seven weeks earlier from the private Care Home where she had lived for four years.
The care costs had eaten most of her savings, but as sole beneficiary of her Will I had been looking forward to receiving what was left. However, I have now received a letter from the Care Home requesting payment of fees for the time she spent in hospital, together with other costs she had incurred. Can I be held liable to pay this now she has died?
A: When someone dies owing money their debts unfortunately do not die with them. They must be paid out of the person’s estate.
It may be the case that the deceased had taken out an insurance policy which would pay out on their death and which is of sufficient value to cover the debt. If however there is not enough available cash, either through such a policy or in savings, then property and personal possessions must be sold to raise the funds to cover the debt. If this should happen it is important not to sell anything for no more than its current market value, as if it is sold above market value the sale will incur a taxable charge.
If there is insufficient funds in the deceased’s estate to clear the debt even after possessions have been sold, the debt will not pass on to a family member of the deceased unless that individual was involved in a joint loan with the deceased or has guaranteed a loan for them. Debts owed by and indeed owed to the deceased must be cleared before any distribution of the deceased’s estate can take place, so the executors of the estate must immediately be informed of any outstanding debts either way.