Are Family Members Responsible for a Deceased Person's Debts in Alberta?

A spouse or child who is grieving can start getting calls from collectors within weeks. The caller may sound as though you personally owe the money, and many people pay out of pressure or fear.

In Alberta, the general approach is that debts of the deceased are dealt with through the estate. There are real exceptions, though, and they turn on what you signed and what you received. This article walks through both.

This article covers the law of Alberta.

Debts are claims against the estate

Alberta's Estate Administration Act defines a valid money claim as a debt owed by the deceased, or another claim that would produce a money judgment against the deceased. Heirs are not named as debtors, and the claim is against the estate. It is a duty of the personal representative to satisfy the debts and obligations of the estate.

If the estate has funds, the representative must use them to satisfy those debts. Funeral and burial expenses are also the estate's responsibility. This is why the estate, not the heirs, is the first source of payment. Whether a particular debt could reach you personally depends on your situation, so it is worth confirming with a lawyer.

If a collector calls you

A representative may require a claimant to verify the claim and state the value of any security held. That means a creditor should be able to show what is owed. A creditor can also apply to administer the estate in order to collect, which is a route that goes through the estate rather than through you personally.

• Ask for the claim in writing, with the account number and the amount claimed.
• Do not agree to pay, and do not say that you will take responsibility for the debt, until you have advice.
• Pass the creditor's details to the personal representative, if that is someone else.
• Keep a record of dates, names and what was said.

Where family can become responsible

Some situations are different from simply being an heir. Whether they apply depends on the documents and the facts, so a lawyer can confirm your position.

If you are the representative and distribute assets without a CRA clearance certificate, you are personally liable for unpaid amounts, up to the value of the assets distributed.

A family home with a mortgage

Under Alberta's Law of Property Act, a mortgagee's right is generally restricted to the land to which the mortgage relates, and no action lies on the covenant for payment in the mortgage. A person who takes over a mortgaged home is generally protected from personal suit on the covenant. Among people claiming through the deceased, a mortgaged property interest is generally primarily liable for its own mortgage debt, unless the will or another document shows otherwise.

There are exceptions. Sections 40 and 41 of the Act do not apply to mortgages given by a corporation, although they apply to an action against an individual. Certain National Housing Act and high-ratio mortgages are excluded from the transferee protection, so insured mortgages can carry personal liability. The individual protections apply only to residential land and farm land. In the residential case they do not apply if the individual or a family member has ever used the land as a bona fide residence, and the individual bears the burden of proof. Because that exception can reach a family home, it is worth confirming how it applies to you. A reverse mortgage is also different, because the death of the last borrower triggers repayment.

What to do next

• Write down every debt you have been told about and who is claiming it.
• Gather any loan, credit card or mortgage documents you signed with the deceased.
• Find out who the personal representative is, or whether an application is still needed.
• Speak to a lawyer before paying, especially if you co-signed or hold a joint account or debt.

Frequently asked questions