Many people worry
about what will happen to their debts after they die. Often, they are concerned
that their family members will be responsible for paying off their debt.
understand what a deceased estate is. All
the assets, income and liabilities of the person who passed away is known as
the deceased estate. Note that the deceased estate is just a legal term and not
a person. Therefore the estate is vested in the Master of the High Court and an
executor or executors are appointed by the Master of the High Court to manage
or handle the estate.
What is the role of
executor after being appointed to manage or handle the estate has three main
tasks to complete:
Collection of all
the assets and then to liquidate the liabilities of the estate, where after the
balance (assets minus liabilities) are distributed to the appointed beneficiaries.
2. The executor for
the duration of the process also takes on legal guardianship over the assets.
3. Note that the
executor is not liable for the debts of the estate but is only the legal
representative of the estate. This also means that the executor in his appointed capacity
can proceed with legal action to collect outstanding debt on behalf of the estate and due
and payable to the estate.
Let us go back to
the original question - What happens to
your debts after you have died?
It all depends on
there are any
assets which includes money or property, remaining in the estate that can be
used to pay of debts;
the debts are
secured or unsecured;
the debts are only
in the deceased’s name, or in joint names with another legal person;
the debts are
guaranteed by someone else.
executor has to, as soon as he/she is appointed, cause a notice to be published
in the Government Gazette and in newspapers calling upon any creditors to come
forward and lodge the claims against the estate.
If there is enough
money available in the estate, the executor sees to it that the debts owed to
those creditors are paid from the money available in the estate;
If there is not
enough money (cash) available in the estate, the executor can sell property and
use the money from the sale to pay these debts;
If there is not
enough money in the estate after all the assets are sold, the estate can be
Other people are
only responsible for paying the debts of the estate if:
the debt is
secured against a particular asset owned by someone else;
the debt is in
joint names with someone else, for instance a spouse to whom the deceased
was married to in community of property;
the debt was
guaranteed by someone.
The difference between secured and unsecured debts
* Secured debts –
This is a debt that is secured against a particular asset. When a bank lends
you money, they may take security for the debt. For example, if you have a mortgage loan at
a bank, your house is security for repayment of your home loan. If you stop paying your
home loan. If you stop paying your home loan, the bank can take your house and sell it to
pay off the debt.
* Unsecured debts –
With these debts, if you stop making repayments, there is no secured
bank can take and sell. The bank must go to court and follow the normal debt
collection procedure to collect the debt. Credit cards, clothing store accounts
loans are examples of such unsecured debts.
How are these different debts recovered after death?
If you have an
outstanding loan when you die, which is secured against an asset owned by you,
the lender can take that asset if repayments on the loan stop. The estate may
lose the asset if for instance the secured loan is in joint names and the
co-borrower cannot maintain monthly payments, the property may be repossessed
by the creditor.
in joint names
If you have a debt
in joint names, for example a credit card debt, then everyone whose name is on
the account is responsible for the debt. If one account-holder dies, their
estate may be used to pay off part of the debt or the joint account-holder will
be responsible for the whole debt.
When you have a
loan and someone else is bounding themselves as surety or guarantee to continue
repayments if the borrower stops making them, that person can be held
responsible for making repayments if the estate is not able to cover the
appointed as executor in handling your affairs after you passed, with the proper
knowledge is very important in light off the above. Make sure your will is in
order and you know the executor appointed will manage your estate in the best
– Praktiese handleiding (Wiechers Vorster)