Am I liable for the debt of my deceased father?

Question: I am farming at home, having taken over last year. I also work off farm. After I took over the home place, my father continued to rent land and farm away himself. He passed away recently and had very few assets to his name (jeep, combine harvester, baler). However, he had a lot of unpaid bills in various agri stores and merchants which, when added up, come to nearly €100,000. My question is: who is legally required to pay all these bills?

As our family comes to terms with our father’s death, we are still receiving unpaid bills in the post.

Do I legally have to pay these or is it just the morally right thing to do? I would have to sell his machinery and still take a loan to pay all the bills. My mother only has her pension as income.

Answer: I am sorry for your loss and the added stress these bills have caused. The executor (if there is a will) or the administrator (if no will) is responsible for managing and distributing the estate, including paying off any debts.

They do not pay out of their own pocket, they use the assets of the estate to do it. If the estate does not have enough money to cover all debts, the remaining debts are written off and creditors cannot chase the executor or the family.

Here is a list of things you need to be aware of.

Order of priority for payment

A solvent estate is one where there are enough assets to pay the debts as well as the funeral and testamentary expenses. However, if a person dies leaving more debts than assets (an insolvent estate), the debts are paid in the following order:

• Funeral expenses (reasonable costs)

• Legal and executor fees

• Tax owing to Revenue

• Secured debts, eg mortgage where land was given as security

• Unsecured debts such as credit cards, personal loans, utility bills.

• If there is not enough money, lower priority creditors may receive nothing.

Family members or beneficiaries are not personally responsible for the deceased’s debts unless they have personally guaranteed them.

For example, this can arise if a parent and child were farming through a partnership/joint herd number as there is joint liability for partnership debts, ie each of the partners are fully responsible for discharging partnership debts.

Identifying the executor or an administrator

If you have not already done so, you should enquire with your father’s solicitor whether he made a will. It is likely the solicitor will only confirm this to the person appointed as executor on the production of a death certificate.

If there was no will, it’s your mother as the next-of-kin that will have to take out administration. If she is unwilling or renounces, you as the child could apply with the written consent of your siblings.

Under the Statute of Limitations Act 1957, if a person dies owing a debt, the time limit for recovering that debt from their estate is as follows – two years from the date of death, or six years from the date the debt became due, whichever expires earlier.

This is unless the debt only became due after the death of the deceased in which case the debtor has six years from that date to sue his estate. For example, if a contractor gave the person who died 30 day credit terms and the person died on day 25, then the six year time limit would apply.

Once the time limit expires then the debt is statute-barred, which means it cannot be enforced in court against the estate.

Debts do not pass to relatives, they are only claimable from the deceased person’s estate (assets left behind).

Disclaimer: The information in this article is intended as a general guide only. While every care is taken to ensure accuracy of information contained in this article, Aisling Meehan, Agricultural Solicitors and Tax Consultants does not accept responsibility for errors or omissions howsoever arising. E-mail aisling@agrisolicitors.ie