Who Pays a Deceased Person's Debts in Nova Scotia Estates

When someone dies owing money, relatives often worry that the bills will land on them. In Nova Scotia the usual starting point is the estate: the deceased person's property is used to deal with their debts, and the personal representative (often called the executor) manages that process.

This article walks through how creditors come forward, why timing matters before anything is handed to beneficiaries, and where an executor can face personal risk. Every estate is different, so use this as a map and not a substitute for advice on your own file.

This article covers the law of Nova Scotia.

The estate deals with debts before beneficiaries are paid

Every estate opened in Nova Scotia must be advertised in the Royal Gazette. The advertisement runs for six months, and after that the estate can move to distribution. The point of the notice is to give creditors a fair chance to come forward before the property is shared out.

If no claim is filed, or if enough assets are kept back to cover the claims that were filed, the personal representative is protected from an action for paying debts and distributing the estate. In plain terms, debts are meant to be sorted out first, and beneficiaries receive what is left.

How creditors make a claim

A creditor files a Notice of Claim in Form 32 within the six-month advertising period and serves a copy on the personal representative. The request to the Royal Gazette for the advertisement is made on Form 31.

If the personal representative disputes a claim, the notice of contested claim is Form 33. Whether a particular claim is valid, or how much of it should be paid, depends on the facts and is worth confirming with a lawyer.

• Keep every bill, statement and letter from a creditor, and note the date you received it.
• Keep accurate records of all property and debts of the estate, because the personal representative is required to do so.
• Do not pay one creditor in a rush without understanding the full picture of what the estate owes.

When an executor can become personally liable

Distributing the estate before the claims period is over carries risk. A personal representative who distributes earlier risks personal liability for unpaid claims. That is why the six-month advertising period matters so much.

There is a protection too. A representative who distributes to people whose claim or address they had no notice of is not liable for those proceeds. A creditor who misses the advertising period may claim only with the court's prior consent.

After 12 months from the grant, or a longer period if the court allows, claims that have been presented must be paid and the distribution made.

How debts show up in the estate's value

For probate tax, security and inventory, the estate is the gross value of personal property plus the fair market value of real property less registered mortgages and encumbrances. A registered mortgage on a house therefore lowers the land value counted, but unsecured debts are not deducted from personal property.

That counting rule is about valuation. It does not decide whether a creditor is paid, which is a separate question.

What to do next

• Find out whether an executor is named and whether that person is willing to act.
• List the known debts and the estate's assets in one place.
• Confirm that the Royal Gazette advertisement has been requested and note when the six months ends.
• Hold off on distributing to beneficiaries until you understand the claims position.
• Speak with a Nova Scotia estates lawyer if a claim is disputed, or if the debts may exceed the assets.

If you are only a relative and not the executor, you can still ask the executor how debts are being handled. Whether any family member could be personally responsible for a particular debt, for example one they signed or guaranteed, depends on the facts and is worth confirming with a lawyer.

Frequently asked questions