What happens to debt when someone dies in Victoria?
When someone dies in Victoria, their debts are generally paid out of their estate before anything is distributed to beneficiaries — family members usually aren't personally responsible for the deceased's debts, unless they guaranteed or jointly held them. Here's how it works.
The estate pays first
The executor or administrator uses the estate's assets to pay the deceased's debts and taxes before distributing the rest. Beneficiaries receive what's left after debts are paid.
Is family liable?
Generally no — relatives aren't personally liable for a deceased person's debts. Exceptions include debts that were jointly held or personally guaranteed, or a joint loan or mortgage.
If the estate can't pay
If the estate doesn't have enough to cover its debts (an insolvent estate), there are rules about the order debts are paid, and beneficiaries may receive little or nothing. Executors should get advice before distributing.
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