What Happens to Your Debts When You Die?

Last updated on March 19, 2024

man stressed over debts

Upon death, debts may not just cease to exist. Here are some of the questions you might have in your mind pertaining to debt liabilities after death. 

Will Your Family Members Inherit Debts?

In Singapore, family members are generally not legally responsible for the debts left behind by the deceased. It is, however, crucial to identify the type of debts that we are dealing with, as there may be exceptions.

Some of the more commonly known debts may include:

  • Credit card debts
  • Loans
  • Taxes
  • Debts incurred illegally
  • Medical debts

As mentioned, family members generally do not have to shoulder the liabilities left behind by the deceased. However, in the event that the deceased holds a joint account, such as a joint personal loan or a mortgage that is co-signed, with a family member that family member will then have to assume the deceased’s responsibilities. He or she will have to pay off the debt as the sole debtor.

How Will the Debts be Paid Off?

Since your family members will not inherit your debts (unless you hold joint accounts with them), you might be wondering how they will then be paid off.

Depending on whether the deceased had written a will, the executor first applies for a Grant of Probate or a Grant of Letter of Administration respectively. After obtaining approval from the courts, the executor can then administer the deceased’s estate. You can find more information regarding wills, probates and executors here.

As a general rule of thumb, debts will be payable out of the deceased’s estate, and one of the roles performed by the executor is to settle these debts by administering the estate. He may thus proceed to, for instance, sell off investments and withdraw the money left in the deceased’s bank accounts to pay off his debts.

It is only after settling these debts will the executor then be able to distribute the remaining assets according to the instructions of the deceased’s will (or according to the Intestate Succession Act rules if the deceased did not have a will).

According to section 57 of the Probate and Administration Act, there are 2 possible scenarios for consideration pertaining to the administration of assets:

  1. If the deceased’s estate is solvent, which means that his assets are more than his liabilities, the executor may use his estate to settle his debts. A specific example is income tax. According to section 58 of the Income Tax Act, the executor will ensure that the deceased’s estate is used to pay off his income tax liabilities.
  2. On the other hand, if his estate is found to be insolvent, his funeral, testamentary and administration expenses shall have priority. Thereafter, the order of repayment of debts will be done according to the Insolvency, Restructuring and Dissolution Act. The beneficiaries of his insolvent estate will not be held legally responsible for the repayment of his debts, and it is likely that his debts will have to be written off.

In short, one could say that the estate of the deceased is responsible for the deceased’s debts after his death.

In the case of medical debts, however, where the deceased has passed away during hospitalisation, the deceased’s MediSave can be used fully, without being subjected to the existing MediSave withdrawal limits to pay the last medical bill. Refer here for more information.

What are the Possible Complications?

Even though it can be said that family members do not inherit the debts of a deceased, it is worth noting that the executor will have to pay off his debts out of his estate and assets before the remaining assets are distributed to the family. Therefore, in this sense, it is likely that family members will still feel the pinch. It may be even harder for the family members if some debts and liabilities of the deceased were unknown to them previously.

Furthermore, as previously mentioned, things may get complicated if there were joint accounts of loans or mortgages. The surviving family members may find themselves saddled with the burden of paying off debts as sole holders.

Illegally incurred debts, such as loans obtained from unlicensed moneylenders, also become a problem as family members may face threats and continuous harassment, especially after the death of the debtor. However, family members should not attempt to pay these debts and should instead seek the appropriate help to resolve the situation.

Estate Planning
  1. Plan Intergenerational Wealth With a Singapore Family Office
  2. Estate Planning for Digital Assets (NFTs, Social Media, Etc.)
  3. 8 Tools You Must Know for Estate Planning in Singapore
  4. Guide to CPF Nominations & How to Make One In Singapore
  5. What Happens to Your Debts When You Die?
  6. Who Pays for the Mortgage Debts and Medical Bills After Death?
  7. Is Inheritance Tax Payable When You Die in Singapore?
  8. Is Stamp Duty Payable When Inheriting Property in Singapore?
  9. How to Donate your Assets to Charity
  10. Organ Donation in Singapore (under HOTA, or For Science)
  11. Finding Missing Persons in Singapore (or ‘Presumed Dead’)
Making a Will
  1. Making a Will in Singapore: What are the Formalities Involved? (2023)
  2. The Complete Guide to Making Your Will in Singapore
  3. Why Should You Make a Will?
  4. Checklist for Drafting a Comprehensive Will in Singapore
  5. Get An Affordable Will Made By Experienced Lawyers
  6. Choosing an Executor for Your Will in Singapore
  7. How to Prepare a Schedule of Assets for Your Will in Singapore
  8. Appointing a Guardian for Your Children in Your Will in Singapore
  9. What is a Mutual Will, Mirror Will and Joint Will?
  10. How to Give Away Overseas Assets in a Will in Singapore
  11. Can I Use My Will to Distribute Insurance Proceeds?
  12. Where Should You Store Your Will?
  13. How Can I Change My Will?
Preparing for Incapacity
  1. Mental Incapacity in Singapore: A Guide
  2. Mental Capacity Assessment for LPAs and Wills
  3. Appointment of Deputies under the Mental Capacity Act
  4. How to Appoint a Deputy for Mentally Incapacitated Persons in Singapore
  5. Advance Medical Directives in Singapore
  6. Making a Lasting Power of Attorney in Singapore
  7. Revocation of a Lasting Power of Attorney
  8. Advance Care Planning in Singapore: Why and How to Get Started
Setting Up a Trust
  1. Creating Pet Trusts in Singapore: Are They Legally Recognised?
  2. What is a Trust? Trust Law in Singapore
  3. Fiduciaries and Fiduciary Law in Singapore
  4. Setting Up a Discretionary Living Trust in Singapore
  5. Trust Protectors: Who are They & How to Appoint One in Singapore
Grant of Probate and Grant of Letters of Administration
  1. No Executor For Your Loved One's Will: What to Do
  2. What is Probate? Is It Needed If Your Loved One Passes Away?
  3. Can the Public Trustee Administer Your Loved One's Estate?
  4. How to Get a Copy of a Deceased's Will in Singapore
  5. Managing a Loved One's Estate After Their Death in Singapore
  6. Applying for a Grant of Probate in Singapore
  7. Intestacy: Applying for Letters of Administration in Singapore
  8. Obtaining a Fresh Grant of Probate and Resealing a Foreign Grant of Probate
  9. Comprehensive Guide to Probate Fees in Singapore
Distribution of Estate Assets
  1. Dispute with Executor of Will in Singapore: What to Do
  2. Bona Vacantia: Dying With No Will or Relatives in Singapore
  3. Who Gets the Joint Bank Account Monies if One Owner Dies?
  4. What Happens If You Die Without a Will in Singapore?
  5. An Executor’s Checklist to Executing a Will in Singapore
  6. What to Do If the Will Cannot be Found
  7. How to Contest a Will in Singapore (Grounds and Procedure)
  8. What Happens to the HDB Flat When One Owner Dies?
  9. How to Access the Bank Account of a Deceased Spouse
  10. What Happens to the Car When the Owner Passes Away?
  11. Simultaneous Death: How are Assets Distributed When Family Members Die at the Same Time?
  12. Can a half-brother be considered a next of kin? (when distributing the assets of the deceased)
  13. What happens to property when a deceased’s next-of-kin or named personal representative is uncontactable?
  14. What happens to property not accounted for in a will?
  15. What happens to a Singapore expatriate's assets when he passes on?
  16. What if a Child or Beneficiary Dies Before the Willmaker?
  17. How Can Your Minor Beneficiaries Receive Their Inheritance?
  18. Unfair Maintenance: What Can Singapore's Law Do for You?
Muslim Inheritance Law
  1. Using Hibah for Muslim Estate Planning in Singapore
  2. Can Muslims Make Nuzriah (or Nazar) in Singapore and How?
  3. Muslim Probate: Guide to Inheritance Certificates in Singapore
  4. Muslim Inheritance Law in Singapore