The passing of a loved one is devastating enough without having to receive collection calls from their creditors. Whether you are the spouse or executor of the deceased’s estate, if there are insufficient assets of the deceased to pay their creditors in full, you should contact a Licensed Insolvency Trustee to discuss a bankruptcy.
Is an executor responsible for paying debt?
The family of the deceased is not personally responsible for paying the deceased’s debt if they didn’t co-sign, guarantee, have a supplementary credit card or jointly owe the debt. The fact that you were married does not make you responsible for paying your spouse’s debt.
Many executors/family members are hesitant to liquidate assets, pay debts and distribute to beneficiaries as they do not want to put themselves at risk to be personally responsible.
The initial consultation with Taylor Leibow Inc. is free of charge. We will complete a detailed assessment of assets (investments, property, vehicles, life insurance, etc.) and liabilities (bank loans, credit cards, income taxes, any lawsuits, etc.) to determine if the estate is insolvent (unable to pay debts in full) and thus should consider a bankruptcy.
Certain assets will transfer directly to beneficiaries (for example, life insurance or RRSP with a designated beneficiary) and will not be considered in the insolvency analysis. A court order is required to bankrupt the estate, but we will work through the process with you and assist in preparing the necessary documentation. Once the bankruptcy is filed, the trustee will take over and liquidate assets, confirm liabilities and deal with the distribution to creditors.
You may want to consult with a lawyer who specializes in estates if you have concerns about your obligations as an executor, but I recommend you contact a Licensed Insolvency Trustee before using your own money to pay a deceased loved one’s creditors.
For more information, please contact Taylor Leibow Insolvency Trustees at 1-888-287-2525
By Kathy Lenart – Insolvency Partner, Licensed Insolvency Trustee
CPA, CA, CIRP
Member and Secretary of the Ontario Association of Insolvency and Restructuring Professionals (OAIRP)
Canadian Association of Insolvency and Restructuring Professionals (CAIRP)
Thank you Julie. Good information to know.
I’ve been researching this topic for a while now, and from what I understand, the length of time an executor has to settle an estate in Canada can vary depending on several factors. It’s crucial to consider the complexity of the estate, any potential disputes among beneficiaries, and whether or not there’s a valid will in place. In some cases, it could take months, while in others, it might stretch into years. It’s definitely a process that requires patience and careful attention to detail.