Has it ever occurred to you, what would happen to your family and loved ones when you passed? Besides the psychological and emotional implications, have you ever considered the financial consequences of death? 


When you die, a deceased estate comes into existence. The deceased estate includes all assets in your name such as mortgages, cars, furniture, bank accounts and life policies. The debts that you owed will also be included as liabilities in your deceased estate account, this includes tax assessments and administration costs. The whole process of handling the deceased estate is regulated by the Administration of Estate Act 66 of 1965.

The Executor who is handling the deceased estate account is legally responsible to handle all assets and liabilities on behalf of the late. This includes paying off any outstanding debts from the estate before distributing any assets to beneficiaries or heirs. Therefore, there is no simple yes or no answer as to whether your debts will automatically be extinguished upon death. This needs to be determined by the following: 

Is there sufficient cash available in the estate to settle all liabilities (debts) on behalf of the debtor? If the answer is no, then there are two scenarios that may occur, namely: 

  1. The executor may request that the beneficiaries of the estate should help settle the debts owed. 
  2. Alternatively, the executor may sell assets such as cars or houses to raise money to pay off the debts. 


If the deceased estate does not have enough cash to meet its obligation, the debts will be paid by order of priority and then the estate will be considered insolvent if it fails to pay off all liabilities. To learn more click here