What happens to a deceased person’s debts upon his death?
When a debtor dies, the debts he owed his creditors at the time of his death do not automatically become void and “die” with him. They can be charged to his estate, to the extent he left one. Likewise, if legal proceedings to collect those debts were already opened during the debtor’s lifetime, they are not necessarily voided by his death.
Section 104 of the Inheritance Law gives payment of the deceased’s debts out of the estate priority over its distribution among the heirs. If the deceased left any assets, his debts must first be paid out of those assets, and only what remains after the debts are paid may be distributed among the heirs.
This means that before the estate is distributed to the heirs, the debts owed to the creditors must be settled and repaid, though only from the estate’s funds and assets. If the total debts exceed the value of the estate’s funds and assets, the heirs are not obligated to cover the shortfall out of their own money.
Sometimes the deceased leaves future debts not yet due, or conditional debts whose condition has not yet been met, which could in principle delay the distribution of the estate’s assets. Section 102 of the Law provides, however, that “a debt of the deceased whose due date has not yet arrived, and a conditional debt, may, if the court sees reason to do so, be ordered secured or paid as the court directs, even before the due date or before the condition is met.” In such a case, one should apply to the court for an order that the future or conditional debt be secured or paid early.
In what order of priority are the estate’s debts paid?
Section 104 of the Inheritance Law provides that the debts of the estate are paid in the following order of priority:
- The expenses of the deceased’s funeral, burial, and tombstone, as is customary in the circumstances.
- The expenses of obtaining an inheritance order or a probate order, and the costs of administering the estate, to the extent they fall on the estate.
- All the debts the deceased owed at the time of his death that were not extinguished by his death, including the amount due to his wife under her ketubah, to the extent it does not exceed a reasonable amount.
- Amounts due to the deceased’s spouse on grounds arising from the marital relationship, other than the ketubah, and amounts due to a spouse under the Spouses (Property Relations) Law, 5733-1973, or under a financial agreement within the meaning of that law.
In other words, funeral expenses and the costs of obtaining the inheritance order or probate order come before the deceased’s debts, and the deceased’s debts come before what is due to the spouse on grounds arising from the marriage or under the Property Relations Law or a financial agreement made under it.
In what order of priority are the deceased’s own debts paid?
Among the debts the deceased owed at the time of his death that were not extinguished by it, the order of priority is as follows:
Taxes and other mandatory payments take priority over the deceased’s other debts, in accordance with the statutes that govern them.
Secured debts the deceased owed at the time of his death take priority over his unsecured debts. Section 101 of the Inheritance Law, 5725-1965 provides that “where a debt of the deceased was secured at the time of his death, the provisions of this Law do not impair its collection out of the security.” So where a debt of the deceased is backed by some form of security, such as a lien, the security can be realized and the debt collected from it even after the death, without the Inheritance Law affecting it or its priority. In other words, the secured creditor’s right prevails not only over the rights of the deceased’s heirs, but also over the rights of the deceased’s other, unsecured creditors.
Estate debts of equal priority are paid out of the estate’s assets in proportion to their amounts.
Who is responsible for paying the deceased’s debts?
Responsibility for settling the estate’s debts rests with the deceased’s heirs, unless the estate has an administrator, in which case the responsibility rests with him.
To discharge that responsibility, they must publish a notice in the newspaper announcing the death and inviting the creditors to file their debt claims with them, within a period of at least 90 days before the estate is distributed.
However, if the heirs or the estate administrator learned of a debt in some other way, publishing the notice does not release them from their responsibility for settling that debt (Sections 99 and 123 of the Inheritance Law).
How are the deceased’s debts paid out of the estate’s assets?
How the deceased’s debts are paid out of the estate depends on when they are paid: before or after the estate is divided among the heirs.
Paying the deceased’s debts before the estate is distributed:
The debts are paid solely out of the deceased’s estate. If the estate is enough to cover the debts and a balance remains, the heirs receive the balance and divide it among themselves according to the inheritance order or the probate order. If the estate is not enough to cover the debts, the heirs need not make up the difference from their own money. However, an heir who transferred or encumbered his share of the estate before it was divided is not released from his liability for the estate’s debts.
Paying the deceased’s debts after the estate is distributed:
Here the question is whether the heirs acted lawfully before the distribution, that is, whether they published a notice to creditors, gave them at least 90 days to file debt claims before the distribution, and paid the debts according to the claims filed with them, or not:
(1) If the heirs acted lawfully – the heirs will not be required to repay these debts personally, unless it is proven that these are debts the heirs knew about at the time the estate was distributed, in which case they must repay them personally, though only up to the value of the assets they received from the estate.
In that case, a creditor who filed his debt claim within the 90 days may sue the heir for the full amount of the debt, up to the limit of the heir’s liability.
A creditor who did not file his debt claim within the 90 days, without justification, may sue the heir only within two years after the 90 days ended, and only for the proportional share of the debt that matches that heir’s share of the entire estate.
(2) If the heirs did not act lawfully – each heir is personally liable for the payment of outstanding debts up to the value of the entire estate at the time of distribution, unless he proves he did not know of a particular debt at the time of distribution, in which case he is liable for that debt only up to the value of the assets he himself received from the estate.
* Updated for 2026
