Debts after death in BC: who pays, and what happens if the estate can’t

By Pardeep S. Grewal, lawyer at Lawgical Law Corporation · Reviewed November 11, 2026

Published November 12, 2026

Pardeep S. Grewal is a lawyer at Lawgical Law Corporation, called to the BC bar in 2024, and a member of the Law Society of British Columbia.

Updated November 11, 2026: the Wills, Estates and Succession Act (ss. 154, 169 to 172) and the court decision cited below checked that day.

When someone dies in BC, their debts don’t disappear, but they don’t pass to their family either. The debts are paid out of the estate before anything goes to the beneficiaries. A spouse, child or other relative is only personally responsible if they were also legally responsible for the debt, for example as a co-borrower, co-signer or joint account holder. The executor’s job is to find the debts, pay the valid ones and only then distribute. If the estate doesn’t have enough to pay everything, it is insolvent, and BC’s Wills, Estates and Succession Act sets a strict order of payment: reasonable funeral and administration costs first, then certain priority claims, then the remaining creditors share proportionately. Assets that pass outside the estate, such as insurance with a named beneficiary, are generally not part of the estate for paying debts.

Lawgical Law Corporation, a probate and estate law firm with offices in Surrey, Abbotsford and Vancouver, BC, guides executors through creditors’ claims and insolvent estates; this guide is by Pardeep S. Grewal.

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Finding and dealing with debts

1. List known debts: mortgage, credit cards, lines of credit, loans, taxes, utilities.
2. Consider a notice to creditors: the executor “may publish a notice in the Gazette to creditors and other claimants”, requiring claims within at least 30 days, and isn’t liable for claims not presented by then (WESA s. 154).
3. Check each claim; the executor can dispute any claim the deceased could have disputed.
4. Pay valid debts before distributing, and keep enough back for taxes: see the final tax return and clearance certificate.

Funeral costs

The person who instructs the funeral home is personally liable to pay it, but is entitled to be repaid from the estate, as a first priority, for the reasonable expenses of a funeral suitable to the deceased’s position and circumstances and the value of the estate (Schara Tzedeck v. Royal Trust Co., 1952 CanLII 199 (SCC)).

If the estate can’t pay everything: the order of payment

An “insolvent estate” is “an estate that is not sufficient to pay all the debts and liabilities of the deceased person” (WESA s. 169). Subject to the rights of secured creditors (such as the mortgage lender against the house), the executor pays in this order (s. 170(1)):

1. reasonable funeral and other expenses, and the executor’s administration costs;
2. the executor’s remuneration;
3. legal expenses of administering the estate;
4. certain unpaid wages for the 180 days before death (capped);
5. certain support or maintenance arrears;
6. certain municipal and First Nation property taxes from the 2 years before death;
7. certain landlord claims for rent arrears;
8. certain workers’ compensation, employment insurance and income tax withholding amounts, rateably;
9. certain employee injury claims; then
10. other government claims and the remaining creditors, rateably.

Creditors can prove debts owing at death; no interest is payable after death unless there’s a surplus (s. 171). Contingent claims must be valued and the claimant notified before the first distribution (s. 172).

WESA or bankruptcy?

An insolvent estate can be administered by the executor under WESA, or by a licensed trustee in bankruptcy under the federal Bankruptcy and Insolvency Act, which takes over if a creditor obtains a bankruptcy order. The priorities differ in some respects, for example for certain Crown claims. Complex estates with many creditors may be better handled by a trustee in bankruptcy, and an executor who administers an insolvent estate risks losing their remuneration if a trustee is appointed. Get advice before paying anyone if solvency is in doubt.

Mistakes I have seen

• Family members paying a parent’s credit cards out of their own pockets, believing they had to.
• Executors paying unsecured creditors in full, then finding priority claims or taxes unpaid.
• Distributing to beneficiaries before the creditors’ notice period expired.

Frequently asked questions

Am I responsible for my parent’s debts in BC?

Not unless you co-signed or jointly held the debt. The debts are paid from the estate.

Do creditors get paid from life insurance or RRSPs?

Generally not where a beneficiary is named and the money passes outside the estate. If the estate is the beneficiary, the money is available to creditors.

What happens to the mortgage on the house?

The lender is a secured creditor. The mortgage is paid from the house or its sale, or the beneficiary who takes the house may take it subject to the mortgage.

What should I do right now?

List every debt with its balance, stop paying any from your own money, and don’t distribute anything until the debts and taxes are known.

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Related guides: notice to creditors · unclaimed money · who decides the funeral · the mortgage after death

Sources

• Wills, Estates and Succession Act (ss. 154, 169 to 172), BC Laws
• Schara Tzedeck v. Royal Trust Co., 1952 CanLII 199 (SCC), as discussed in CLE BC, Probate and Estate Administration Practice Manual, §11.36; insolvent estates, §§1.117, 11.77

This article is general information about BC law, not legal advice for your situation.