Someone Owes Me Money, But They’ve Died. What Can I do?

by Patrick Walsh

The first thing you need to know is that debts can’t be inherited, but they don’t disappear either.

Everything that a person owns or has a right to when they die forms what we call the “estate”. The estate also takes over any debts that person had when they died.

So What Can You Do?

The first thing you need to do is locate or identify the person (or one of the people if there are more than one) who is managing the estate. This person will be called either the “Executor” or the “Administrator”, depending on whether the deceased left a will or not, and will usually be the person’s spouse/partner, a family member, or a close friend. Occasionally, the person’s solicitor may be their executor, or the State Trustee may be their administrator. If you know the person personally, it should be fairly easy to identify who that person is. If you don’t now the person or their family well, eg if they owe you money for goods or services you provided, this may be more difficult.

Once you have identified the Executor/Administrator, you need to make sure they are aware of the debt. You are likely concerned about giving the person’s loved ones time to grieve before you start asking for money. The Executor/Administrator often doesn’t finalise the estate within 6 months, so you do have time.

If you still haven’t been able to locate the Executor/Administrator, you can try sending a letter, and any invoices, addressed to “the Estate of [person’s name]” to their last known address. This should come to the attention of the Executor or Administrator, but is less certain than locating them directly.

Is There Somewhere I Can Check?

Some estates require a “Grant of Probate” (which appoints an executor when there is a valid will) or “Letters of Administration” (which appoints an administrator when there is no valid will). This will typically be the case where the person lived in aged care or had more than $50,000 in bank accounts. You can see if someone has applied for either application on the Supreme Court website. Otherwise, there typically won’t be a notification.

So What’s Next?

Debts get paid before inheritances, unless the six months has passed and the Executor/Administrator was unaware of your debt and the estate has been distributed to beneficiaries. Once you have identified the Executor/Administrator, you will need to prove your debt. If your debt is an invoice for good or services, this should be straight forward. If it was a personal loan agreed verbally between friends, it may be more difficult to convince the Executor/Administrator. After that, you can recover the debt from the estate just as if the person was still alive, as long as there is enough money in the estate. Because debts don’t get inherited, if the estate has more debt than its total value, there won’t be enough money to pay everyone.

What If that Doesn’t Work?

If you suspect that the estate may not be able to pay all its debts, are having trouble getting the executor to acknowledge your debt, or are otherwise having trouble recovering your debt, you should speak to a solicitor as early as possible, because once the estate is distributed, it can be much more difficult to recover your money.

Someone Owes Me Money, But They’ve Died. What Can I do?