I often receive enquiries as to what debts a person’s Estate must pay, and what debts do not form part of the Estate. The debts that don’t form part of your Estate include debts incurred by a company or trust. Any debts which are incurred in your name alone, either personally or by way of guarantee, will be due to be paid by your Estate.
How are my debts paid by my Estate?
It is important to note that these debts are not paid by your Executors personally, they are paid through the cashing in or selling of your Estate assets, including your bank accounts, proceeds from sale of your property which forms part of your Estate, and possibly your superannuation if the Trustee of the super fund elects to pay your super into your Estate.
Is my HELP debt treated like any other debt of my Estate?
Your HELP debt is not treated like other debts of your Estate. Section 137-20 of the Higher Education Support Act 2003 states that upon the death of a person who owes a HELP debt to the Commonwealth, the debt is taken to have been paid. This means that your Estate will not have to pay the remainder of your HELP debt.
Do some debts have greater priority to be paid than others?
Yes. The expenses for your funeral and for the administration of your Estate (including legal fees) must be paid first. Depending on the debts owing, some will have greater priority than others.
If you are the Executor or administrator of an Estate where the deceased had debts when they passed away, I recommend you contact an experienced Estate administration lawyer to assist you with the Estate administration to ensure any debts are paid in the right order of priority.
Please contact me if you would like advice or assistance regarding education debt and estate related matters.
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