One of the most common concerns families have after the death of a loved one is what will happen to any debts they leave behind. Many people worry that they may become personally responsible for unpaid credit cards, loans or other debts.

Fortunately, this is not usually the case.

When someone dies, any debts they owe are generally paid from their estate. The estate includes everything they owned at the date of death, such as bank accounts, investments, property and personal belongings. Before any inheritance can be distributed to beneficiaries, the person's debts and liabilities must first be dealt with.

Common debts can include mortgages, credit cards, personal loans, utility bills, care fees and outstanding tax liabilities. It is the responsibility of the executors or administrators of the estate to identify these debts, notify creditors where necessary and ensure that they are paid correctly.

Where there are sufficient assets in the estate, debts will usually be paid in full. However, if the estate does not have enough funds, some debts may remain unpaid, but family members are generally not expected to make up the shortfall from their own finances. In these circumstances, the estate is known as an insolvent estate and there are strict legal rules governing the order in which creditors are paid.

If you suspect the estate is insolvent, we would strongly recommend you seek legal advice so that you can ensure debts are paid in the correct order.

There are some important exceptions to be aware of. For example, if a debt was held jointly, such as a mortgage or loan, the surviving borrower will usually remain responsible for the debt. The same may apply where someone has guaranteed another person's borrowing.

Executors should take particular care before distributing any assets to beneficiaries. If money is paid out too soon and a creditor later comes forward, the executor could be personally liable for the debt.

Administering an estate is often more complicated than families expect, particularly where debts, property or multiple beneficiaries are involved. Taking legal advice at an early stage can help ensure that the estate is administered correctly and can provide reassurance during what is often a difficult time.