Credit Cards and Loans After a Death: Ontario Executor Guide

Credit cards, lines of credit and loans do not disappear at death, but they also do not automatically become your own debt as executor. They are generally dealt with out of the estate before beneficiaries receive their shares.

This guide explains the order of work: stopping new charges, learning what is owed, and handling creditors with care. Every estate differs, so a lawyer can confirm how these rules apply to yours.

What to cancel and what to keep

Start by finding every card, line of credit, loan and store account. Statements, mail, credit bureau reports and bank records usually reveal them. Contact each lender, tell them about the death and ask them to stop new activity and send a statement of the balance on the date of death.

Hold off on closing some things. Ongoing costs that protect the estate, such as insurance or utilities on a vacant house, may still need to be paid. An estate trustee who believes an expense is properly incurred may pay it from estate property, or pay it personally and recover it from the estate, although the court may later disallow it.

Who is responsible for the balances

The deceased's property, other than property passing by survivorship, vests in the personal representative as trustee, subject to payment of the deceased's debts. In plain terms, debts are paid out of the estate. Whether someone else is also liable, such as a joint account holder or co-signer, depends on the agreement they signed, so check the paperwork.

Property held with a right of survivorship, such as a home held as joint tenants, passes to the survivor and is not part of the estate the executor deals with.

Ontario's official guidance says the estate is distributed once assets have been liquidated and funeral and burial expenses and any debts have been paid.

Handling creditors and claims

A personal representative who gives the notices the court would have directed may distribute the assets and is not liable for amounts distributed to anyone whose claim they had no notice of at the time. That protection does not apply to heirs, next of kin, devisees or legatees claiming as such.

If you dispute a creditor's claim, you may serve a written notice contesting it. The claimant must apply to court within 30 days of receiving it, or within a further three months if a judge allows. Otherwise the claim is deemed abandoned and forever barred. The same process applies to unliquidated claims.

• Keep every statement and creditor letter.
• Do not pay one creditor ahead of others until you know whether the estate can cover everything.
• Ask a lawyer before rejecting a large claim.

If the estate cannot pay everything

Where assets are insufficient, debts are paid proportionately without preference or priority, subject to existing liens. The court may relieve a personal representative who acted honestly and reasonably.

If you distribute too early and tax is owing without a clearance certificate, you are personally liable for the unpaid amounts, up to the value of what you distributed. That is why timing matters. Wait until debts and tax are sorted out.

What to do next

• Get certified copies of the death certificate and, if you have one, your certificate of appointment.
• Make a list of every account, lender and balance as of the date of death.
• Ask lenders to freeze the accounts and send written statements.
• Keep accurate records of everything you pay and receive.
• Give notice to creditors as a lawyer advises before you distribute.
• File the required tax returns and confirm balances owing to the CRA are resolved.

If the balances look larger than the assets, speak with a lawyer before paying anything.

Frequently asked questions